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AND  THE  STATE  OF  THE 
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THE  VESTED  INTERESTS 


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THE  VESTED  INTERESTS 

AND  THE  STATE  OF 
THE  INDUSTRIAL  ARTS 

("The  Modern  Point  of  View 
and  the  New  Order") 

BY 
THORSTEIN  VEBLEN 


NEW  YORK     B.  W.  HUEBSCH     MCMXIX 


COPYRIGHT,     1919, 
BY  B.   W.  HUEBSCH 


PEINTKD   IN    THB    rNITID    8TATI8   OT   AMKBICA 


PREFACE 

These  papers  have  already  appeared,  in  a  slightly 
abridged  form,  in  the  Dial;  running  from  the  igth 
October,  1918,  to  the  25th  January,  1919,  under  the 
general  caption:  The  Modern  Point  of  View  and 
the  New  Order.  They  are  here  reprinted  in  a  col- 
lected form  in  response  to  requests  which  have  come 
to  hand.  Except  for  a  more  detailed  description  at 
one  point  and  another  this  text  does  not  differ  ma- 
terially from  the  papers  in  the  Dial.  In  point  of 
scope  and  logical  content  this  discussion  resumes  the 
argument  of  a  course  of  lectures  before  students  in 
Amherst  College  in  May,  1918. 

The  aim  of  these  papers  is  to  show  how  and,  as 
far  as  may  be,  why  a  discrepancy  has  arisen  in  the 
course  of  time  between  those  accepted  principles  of 
law  and  custom  that  underlie  business  enterprise  and 
the  businesslike  management  of  industry,  on  the  one 
hand,  and  the  material  conditions  which  have  now 
been  engendered  by  that  new  order  of  industry  that 
took  its  rise  in  the  late  i8th  century,  on  the  other 
hand;  together  with  some  speculations  on  the  civil 
and  political  difficulties  set  afoot  by  this  discrepancy 
between  business  and  industry. 

March,  1919. 


CONTENTS 

CHAPTER 

I  THE  INSTABILITY  OF  KNOWLEDGE  AND  BELIEF,  i 

II  THE  STABILITY  OF  LAW  AND  CUSTOM,  17 

III  THE  STATE  OF  THE  INDUSTRIAL  ARTS,  35 

IV  FREE  INCOME,  63 

V    THE  VESTED  INTERESTS,  85 
VI    THE  DIVINE  RIGHT  OF  NATIONS,  114 
VII    LIVE  AND  LET  LIVE,  138 

VIII    THE  VESTED  INTERESTS  AND  THE  COMMON 
MAN,  158 


THE   INSTABILITY   OF   KNOWLEDGE   AND   BELIEF 

As  is  true  of  any  other  point  of  view  that  may  be 
characteristic  of  any  other  period  of  history,  so  also 
the  modern  point  of  view  is  a  matter  of  habit.  It 
is  common  to  the  modern  civilised  peoples  only  in  so 
far  as  these  peoples  have  come  through  substantially 
the  same  historical  experience  and  have  thereby  ac- 
quired substantially  the  same  habits  of  thought  and 
have  fallen  into  somewhat  the  same  prevalent  frame 
of  mind.  This  modern  point  of  view,  therefore,  is 
limited  both  in  time  and  space.  It  is  characteristic 
of  the  modern  historical  era  and  of  such  peoples  as 
lie  within  the  range  of  that  peculiar  civilisation 
which  marks  off  the  modern  world  from  what  has 
gone  before  and  from  what  still  prevails  outside  of 
its  range.  In  other  words,  it  is  a  trait  of  modern 
Christendom,  of  Occidental  civilisation  as  it  has  run 
within  the  past  few  centuries.  This  general  state- 
ment is  not  vitiated  by  the  fact  that  there  has  been 
some  slight  diffusion  of  these  modern  and  Western 
ideas  outside  of  this  range  in  recent  times. 

By  historical  accident  it  happens  that  the  modern 
point  of  view  has  reached  its  maturest  formulation 
and  prevails  with  the  least  faltering  among  the 
French  and  English-speaking  peoples;  so  that  these 
peoples  may  be  said  to  constitute  the  center  of  diffu- 

i 


2  THE  VESTED  INTERESTS 

sion  for  that  system  of  ideas  which  is  called  the  mod- 
ern point  of  view.  Outward  from  this  broad  center 
the  same  range  of  ideas  prevail  throughout  Chris- 
tendom, but  they  prevail  with  less  singleness  of  con- 
*viction  among  the  peoples  who  are  culturally  more 
remote  from  this  center;  increasingly  so  with  each 
farther  remove.  These  others  have  carried  over  a 
larger  remainder  of  the  habits  of  thought  of  an 
earlier  age,  and  have  carried  them  over  in  a  better 
state  of  preservation.  It  may  also  be  that  these 
others,  or  some  of  them,  have  acquired  habits  of 
thought  of  a  new  order  which  do  not  altogether  fit 
into  that  system  of  ideas  that  is  commonly  spoken  of 
as  the  modern  point  of  view.  That  such  is  the  case 
need  imply  neither  praise  nor  blame.  It  is  only  that, 
by  common  usage,  these  remainders  of  ancient  habits 
of  thought  and  these  newer  preconceptions  that  do 
not  fit  into  the  framework  of  West-European  con- 
ventional thinking  are  not  ordinarily  rated  as  intrin- 
sic to  the  modern  point  of  view.  They  need  not 
therefore  be  less  to  the  purpose  as  a  guide  and  crite- 
rion of  human  living;  it  is  only  that  they  are  alien 
to  those  purposes  which  are  considered  to  be  of 
prime  consequence  in  civilised  life  as  it  is  guided  and 
tested  by  the  constituent  principles  of  the  modern 
point  of  view. 

What  is  spoken  of  as  a  point  of  view  is  always  a 
composite  affair;  some  sort  of  a  rounded  and  bal- 
anced system  of  principles  and  standards,  which  are 
taken  for  granted,  at  least  provisionally,  and  which 
serve  as  a  base  of  reference  and  legitimation  in  all 
questions  of  deliberate  opinion.  So  when  any  given 
usage  or  any  line  of  conduct  or  belief  is  seen  and 


KNOWLEDGE  AND  BELIEF  3 

approved  from  the  modern  point  of  view,  it  comes 
to  the  same  as  saying  that  these  things  are  seen  and 
accepted  in  the  light  of  those  principles  which  mod- 
ern men  habitually  consider  to  be  final  and  sufficient. 
They  are  principles  of  right,  equity,  propriety,  duty, 
perhaps  of  knowledge,  belief,  and  taste. 

It  is  evident  that  these  principles  and  standards 
of  what  is  right,  good,  true,  and  beautiful,  will  vary 
from  one  age  to  another  and  from  one  people  to 
another,  in  response  to  the  varying  conditions  of 
life;  inasmuch  as  these  principles  are  always  of  the 
nature  of  habit;  although  the  variation  will  of 
course  range  only  within  the  limits  of  that  human  na- 
ture that  finds  expression  in  these  same  principles  of 
right,  good,  truth,  and  beauty.  So  also,  it  will  be 
found  that  something  in  the  way  of  a  common  meas- 
ure of  truth  and  sufficiency  runs  through  any  such 
body  of  principles  that  are  accepted  as  final  and  self- 
evident  at  any  given  time  and  place, —  in  case  this 
habitual  body  of  principles  has  reached  such  a  degree 
of  poise  and  consistency  that  they  can  fairly  be  said 
to  constitute  a  stable  point  of  view.  It  is  only  be- 
cause there  is  such  a  degree  of  consistency  and  such 
a  common  measure  of  validity  among  the  commonly 
accepted  principles  of  conduct  and  belief  today,  that 
it  is  possible  to  speak  intelligently  of  the  modern 
point  of  view,  and  to  contrast  it  with  any  other  point 
of  view  which  may  have  prevailed  earlier  or  else- 
where, as,  e.  g.,  in  the  Middle  Ages  or  in  Pagan 
Antiquity. 

The  Romans  were  given  to  saying,  Tempora  mu- 
tantur,  and  the  Spanish  have  learned  to  speak  indul- 
gently in  the  name  of  Costumbres  del  pais.  The 


4  THE  VESTED  INTERESTS 

common  law  of  the  English-speaking  peoples  does 
not  coincide  at  all  points  with  what  was  indefeasibly 
right  and  good  in  the  eyes  of  the  Romans;  and  still 
less  do  its  principles  countenance  all  the  vagaries  of 
the  Mosaic  code.  Yet,  each  and  several,  in  their 
due  time  and  institutional  setting,  these  have  all  been 
tried  and  found  valid  and  have  approved  themselves 
as  securely  and  eternally  right  and  good  in  princi- 
ple. 

Evidently  these  principles,  which  so  are  made  to 
serve  as  standards  of  validity  in  law  and  custom, 
knowledge  and  belief,  are  of  the  nature  of  canons, 
established  rules,  and  have  the  authority  of  prece- 
dent, prescription.  They  have  been  defined  by  the 
attrition  of  use  and  wont  and  disputation,  and  they 
are  accepted  in  a  somewhat  deliberate  manner  by 
common  consent,  and  are  upheld  by  a  deliberate 
public  opinion  as  to  what  is  right  and  seemly.  In 
the  popular  apprehension,  and  indeed  in  the  appre- 
hension of  the  trained  jurists  and  scholars  for  the 
time  being,  these  constituent  principles  of  the  ac- 
cepted point  of  view  are  "  fundamentally  and  eter- 
nally right  and  good."  But  this  perpetuity  with 
which  they  so  are  habitually  invested  in  the  popular 
apprehension,  in  their  time,  is  evidently  such  a  qual- 
ified perpetuity  only  as  belongs  to  any  settled  out- 
growth of  use  and  wont.  They  are  of  an  institu- 
tional character  and  they  are  endowed  with  that  de- 
gree of  perpetuity  only  that  belongs  to  any  institu- 
tion. So  soon  as  a  marked  change  of  circumstances 
comes  on, —  a  change  of  a  sufficiently  profound,  en- 
during and  comprehensive  character,  such  as  per- 
sistently to  cross  or  to  go  beyond  those  lines  of  use 


and  wont  out  of  which  these  settled  principles  have 
emerged, —  then  these  principles  and  their  standards 
of  validity  and  finality  must  presently  undergo  a  re- 
vision, such  as  to  bring  on  a  new  balance  of  princi- 
ples, embodying  the  habits  of  thought  enforced  by  a 
new  situation,  and  expressing  itself  in  a  revised 
scheme  of  authoritative  use  and  wont,  law  and  cus- 
tom. In  the  transition  from  the  medieval  to  the 
modern  point  of  view,  e.  g.,  there  is  to  be  seen  such 
a  pervasive  change  in  men's  habitual  outlook,  an- 
swering" to  the  compulsion  of  a  new  range  of  circum- 
stances which  then  came  to  condition  the  daily  life  of 
the  peoples  of  Christendom. 

In  this  mutation  of  the  habitual  outlook,  between 
medieval  and  modern  times,  the  contrast  is  perhaps 
most  neatly  shown  in  the  altered  standards  of  knowl- 
edge and  belief,  rather  than  in  the  settled  domain 
of  law  and  morals.  Not  that  the  mutation  of  hab- 
its which  then  overtook  the  Western  world  need 
have  been  less  wide  or  less  effectual  in  matters  of 
conduct;  but  the  change  which  has  taken  effect  in 
science  and  philosophy,  between  the  fourteenth  cen- 
tury and  the  nineteenth,  e.  g.,  appears  to  have  been 
of  a  more  recognizable  character,  more  easily  de- 
fined in  succinct  and  convincing  terms.  It  has  also 
quite  generally  attracted  the  attention  of  those  men 
who  have  interested  themselves  in  the  course  of  his- 
torical events,  and  it  has  therefore  become  some- 
thing of  a  commonplace  in  any  standard  historical 
survey  of  modern  civilisation  to  say  that  the  scheme 
of  knowledge  and  belief  underwent  a  visible  change 
between  the  Middle  Ages  and  modern  times. 

It  will  also  be  found  true  that  the  canons  of  knowl- 


6  THE  VESTED  INTERESTS 

edge  and  belief,  the  principles  governing  what  is  fact 
and  what  is  credible,  are  more  intimately  and  intrin- 
sically involved  in  the  habitual  behavior  of  the  hu- 
man spirit  than  any  factors  of  human  habit  in  other 
bearings.  Such  is  necessarily  the  case,  because  the 
principles  which  guide  and  limit  knowledge  and  be- 
lief are  the  ways  and  means  by  which  men  take  stock 
of  what  is  to  be  done  and  by  which  they  take  thought 
of  how  it  is  to  be  done.  It  is  by  the  use  of  their 
habitual  canons  of  knowledge  and  belief,  that  men 
construct  those  canons  of  conduct  which  serve  as 
guide  and  standards  in  practical  life.  Men  do  not 
[pass  appraisal  on  matters  which  lie  beyond  the 
reach  of  their  knowledge  and  belief,  nor  do  they 
formulate  rules  to  govern  the  game  of  life  beyond 
that  limit. 

So,  congenitally  blind  persons  do  not  build  color 
schemes;  nor  will  a  man  without  an  "ear  for 
music "  become  a  master  of  musical  composition. 
So  also,  "  the  medieval  mind  "  took  no  thought  and 
made  no  provision  for  those  later-arisen  exigencies 
of  life  and  those  later-known  facts  of  material  sci- 
ence which  lay  yet  beyond  the  bounds  of  its  medieval 
knowledge  and  belief;  but  this  "medieval  mind" 
at  the  same  time  spent  much  thought  and  took  many 
excellent  precautions  about  things  which  have  now 
come  to  be  accounted  altogether  fanciful, —  things 
which  the  maturer  insight,  or  perhaps  the  less  fertile 
conceit,  of  a  more  experienced  age  has  disowned 
as  being  palpably  not  in  accord  with  fact. 

That  is  to  say,  things  which  once  were  convinc- 
ingly substantial  and  demonstrable,  according  to  the 
best  knowledge  and  belief  of  the  medieval  mind, 


KNOWLEDGE  AND  BELIEF  7 

can  now  no  longer  be  discerned  as  facts,  according 
to  those  canons  of  knowledge  and  belief  that  are 
now  doing  duty  among  modern  men  as  conclusive 
standards  of  reality.  Not  that  all  persons  who  are 
born  within  modern  times  are  thereby  rendered  un- 
able to  know  and  to  believe  in  such  medieval  facts, 
e.  g.,  as  horoscopes,  or  witchcraft,  or  gentle  birth, 
or  the  efficacy  of  prayer,  or  the  divine  right  of  kings; 
but,  taken  by  and  large,  and  in  so  far  as  it  falls  un- 
der the  control  of  the  modern  point  of  view,  the 
deliberate  consensus  of  knowledge  and  belief  now 
runs  to  the  effect  that  these  and  other  imponderables 
like  them  no  longer  belong  among  ascertained  or  as- 
certainable  facts;  but  that  they  are  on  the  other 
hand  wholly  illusory  conceits,  traceable  to  a  mis- 
taken point  of  view  prevalent  in  that  earlier  and 
cruder  age. 

The  principles  governing  knowledge  and  be- 
lief at  any  given  time  are  primary  and  pervasive,  be- 
yond any  others,  in  that  they  underlie  all  human  de- 
liberation and  comprise  the  necessary  elements  of 
all  human  logic.  But  it  is  also  to  be  noted  that  these 
canons  of  knowledge  and  belief  are  more  imme- 
diately exposed  to  revision  and  correction  by  expe- 
rience than  the  principles  of  law  and  morals.  So 
soon  as  the  conditions  of  life  shift  and  change  in  any 
appreciable  degree,  experience  will  enforce  a  revi- 
sion of  the  habitual  standards  of  actuality  and  credi- 
bility, because  of  the  habitual  and  increasingly  ob- 
vious failure  of  what  has  before  habitually  been  re- 
garded as  an  ascertained  fact.  Things  which,  un- 
der the  ancient  canons  of  knowledge,  have  habitually 
been  regarded  as  known  facts, —  as,  e.  g.,  witchcrafv, 


8  THE  VESTED  INTERESTS 

or  the  action  of  bodies  at  a  distance, —  will  under 
altered    circumstances    prove    themselves    by    ,    t 
rience  to  have  only  a  supposititious  reality. 

Any  knowledge  that  runs  in  such  out-worn  terms 
turns  out  to  be  futile,  misleading,  meaningless;  ar^ 
the  habit  of  imputing  qualities  and  behavior  of  . 
kind  to  everyday  facts  will  then  fall  into  disuse,  p'rc 
gressively  as  experience  continues  to  bring  home  the 
futility  of  all  that  kind  of  imputation.  And  pres- 
ently the  habit  of  perceiving  that  class  of  qualities 
and  behavior  in  the  known  facts  is  therefore  grad- 
ually lost.  So  also,  in  due  time  the  observances  and 
the  precautions  and  provisions  embodied  in  law  and 
custom  for  the  preservation  or  the  control  of  these 
lost  imponderables  will  also  fall  into  disuse  and  dis- 
appear out  of  the  scheme  of  institutions,  by  way  of 
becoming  dead  letter  or  by  abrogation.  Partic- 
ularly will  such  a  loss  of  belief  and  insight,  and  the 
consequent  loss  of  those  imponderables  whose 
ground  has  thereby  gone  out  from  under  them,  take 
effect  with  the  passing  of  generations. 

An  Imponderable  is  an  article  of  make-believe 
which  has  become  axiomatic  by  force  of  settled  habit. 
It  can  accordingly  cease  to  be  an  Imponderable  by 
a  course  of  unsettling  habit.  Those  elders  in  whom 
the  ancient  habits  of  faith  and  insight  have  been  in- 
grained, and  in  whose  knowledge  and  belief  the  im- 
ponderables in  question  have  therefore  had  a  vital 
reality,  will  presently  fall  away;  and  the  new  gen- 
eration whose  experience  has  run  on  other  lines  are 
in  a  fair  way  to  lose  these  articles  of  faith  and  in- 
sight, by  disuse.  It  is  a  case  of  obsolescence  by  ha- 
bitual disuse.  And  the  habitual  disuse  which  so  al- 


KNOWLEDGE  AND  BELIEF  9 

1^-  -  *-ne  ancient  canons  of  knowledge  and  belief  to 
laWvvay,  and  which  thereby  cuts  the  ground  from 
under  the  traditional  system  of  law  and  custom,  is 
reenforced  by  the  advancing  discipline  of  a  new  or- 
of  experience,  which  exacts  an  habitual  appre- 

fl'!ion  of  workday  facts  in  terms  of  a  different  kind 
and  thereby  brings  on  a  revaluation  and  revision  of 
the  traditional  rules  governing  human  relations. 
The  new  terms  of  workday  knowledge  and  belief, 
which  do  not  conform  to  the  ancient  canons,  go  to 
enforce  and  stabilise  new  canons  and  standards,  of 
a  character  alien  to  the  traditional  point  of  view. 
It  is,  in  other  words,  a  case  of  obsolescence  by  dis- 
placement as  well  as  by  habitual  disuse. 

This  unsettling  discipline  that  is  brought  to  bear 
by  workday  experience  is  chiefly  and  most  imme- 
diately the  discipline  exercised  by  the  material  con- 
ditions of  life,  the  exigencies  that  beset  men  in  their 
everyday  dealings  with  the  material  means  of  life; 
inasmuch  as  these  material  facts  are  insistent  and 
uncompromising.  And  the  scope  and  method  of 
knowledge  and  belief  which  is  forced  on  men  in  their 
everyday  material  concerns  will  unavoidably,  by  ha- 
bitual use,  extend  to  other  matters  as  well;  so  as  also 
to  affect  the  scope  and  method  of  knowledge  and  be- 
lief in  all  that  concerns  those  imponderable  facts 
which  lie  outside  the  immediate  range  of  material  ex- 
perience. It  results  that,  in  the  further  course  of 
changing  habituation,  those  imponderable  relations, 
conventions,  claims  and  perquisites,  that  make  up 
the  time-worn  system  of  law  and  custom  will  una- 
voidably also  be  brought  under  review  and  will  be 
revised  and  reorganised  in  the  light  of  the  same 


io  THE  VESTED  INTERESTS 

new  principles  of  validity  that  are  found  to  be  suf- 
ficient in  dealing  with  material  facts. 

Given  time  and  a  sufficiently  exacting  run  of  ex- 
perience, and  it  will  follow  necessarily  that  much  the 
same  standards  of  truth  and  finality  will  come  to 
govern  men's  knowledge  and  valuation  of  facts 
throughout;  whether  the  facts  in  question  lie  in  the 
domain  of  material  things  or  in  the  domain  of  those 
imponderable  conventions  and  preconceptions  that 
decide  what  is  right  and  proper  in  human  intercourse. 
It  follows  necessarily,  because  the  same  persons, 
bent  by  the  same  discipline  and  habituation,  take 
stock  of  both  and  are  required  to  get  along  with 
both  during  the  same  lifetime.  More  or  less  rigor- 
ously the  same  scope  and  method  of  knowledge  and 
valuation  will  control  the  thinking  of  the  same  in- 
dividuals throughout;  at  least  to  the  extent  that  any 
given  article  of  faith  and  usage  which  is  palpably  at 
cross  purposes  with  this  main  intellectual  bent  will 
soon  begin  to  seem  immaterial  and  irrelevant  and 
will  tend  to  become  obsolete  by  neglect. 

Such  has  always  been  the  fate  which  overtakes  any 
notable  articles  of  faith  and  usage  that  belong  to  a 
bygone  point  of  view.  Any  established  system  of 
law  and  order  will  remain  securely  stable  only  on 
condition  that  it  be  kept  in  line  or  brought  into  line 
to  conform  with  those  canons  of  validity  that  have 
the  vogue  for  the  time  being;  and  the  vogue  is  a  mat- 
ter of  habits  of  thought  ingrained  by  everyday  ex- 
perience. And  the  moral  is  that  any  established 
system  of  law  and  custom  is  due  to  undergo  a  revi- 
sion of  its  constituent  principles  so  soon  as  a  new 
order  of  economic  life  has  had  time  materially  to 


KNOWLEDGE  AND  BELIEF  n 

affect  the  community's  habits  of  thought.  But  all 
the  while  the  changeless  native  proclivities  of  the 
race  will  assert  themselves  in  some  measure  in  any 
eventual  revision  of  the  received  institutional  sys- 
tem; and  always  they  will  stand  ready  eventually  to 
break  the  ordered  scheme  of  things  into  a  paralytic 
mass  of  confusion  if  it  can  not  be  bent  into  some 
passable  degree  of  congruity  with  the  paramount  na- 
tive needs  of  life. 

What  is  likely  to  arrest  the  attention  of  any  stu- 
dent of  the  modern  era  from  the  outset  is  the  pecul- 
iar character  of  its  industry  and  of  its  intellectual 
outlook;  particularly  the  scope  and  method  of  mod- 
ern science  and  technology.  The  intellectual  life  of 
modern  Europe  and  its  cultural  dependencies  differs 
notably  from  what  has  gone  before.  There  is  all 
about  it  an  air  of  matter-of-fact  both  in  its  technol- 
ogy and  in  its  science;  which  culminates  in  a  "  mech- 
anistic conception  "  of  all  those  things  with  which 
scientific  inquiry  is  concerned  and  in  the  light  of 
which  many  of  the  dread  realities  of  the  Middle 
Ages  look  like  superfluous  make-believe. 

But  it  has  been  only  during  the  later  decades  of 
the  modern  era  —  during  that  time  interval  that 
might  fairly  be  called  the  post-modern  era  —  that 
this  mechanistic  conception  of  things  has  begun  se- 
riously to  affect  the  current  system  of  knowledge  and 
belief;  and  it  has  not  hitherto  seriously  taken  effect 
except  in  technology  and  in  the  material  sciences. 
So  that  it  has  not  hitherto  seriously  invaded  the  es- 
tablished scheme  of  institutional  arrangements,  the 
system  of  law  and  custom,  which  governs  the  rela- 


12  THE  VESTED  INTERESTS 

tions  of  men  to  one  another  and  defines  their  mutual 
rights,  obligations,  advantages  and  disabilities. 
But  it  should  reasonably  be  expected  that  this  estab- 
lished system  of  rights,  duties,  proprieties  and  disa- 
bilities will  also  in  due  time  come  in  for  something  in 
the  way  of  a  revision,  to  bring  it  all  more  nearly  into 
congruity  with  that  matter-of-fact  conception  of 
things  that  lies  at  the  root  of  the  late-modern  civil- 
isation. 

The  constituent  principles  of  the  established  sys- 
tem of  law  and  custom  are  of  the  nature  of  impon- 
derables, of  course;  but  they  are  imponderables 
which  have  been  conceived  and  formulated  in  terms 
of  a  different  order  from  those  that  are  convincing 
to  the  twentieth-century  scientists  and  engineers. 
Whereas  the  line  of  advance  of  the  scientists  and  en- 
gineers, dominated  by  their  mechanistic  conception  of 
things,  appears  to  be  the  main  line  of  march  for 
modern  civilisation.  It  should  seem  reasonable  to 
expect,  therefore,  that  the  scheme  of  law  and  custom 
will  also  fall  into  line  with  this  mechanistic  concep- 
tion that  appears  to  mark  the  apex  of  growth  in 
modern  intellectual  life.  But  hitherto  the  "due 
time  "  needed  for  the  adjustment  has  apparently  not 
been  had,  or  perhaps  the  experience  which  drives 
men  in  the  direction  of  a  mechanistic  conception  of 
all  things  has  not  hitherto  been  driving  them  hard 
enough  or  unremittingly  enough  to  carry  such  a  re- 
vision of  ideas  out  in  the  system  of  law  and  custom. 
The  modern  point  of  view  in  matters  of  law  and  cus- 
tom appears  to  be  somewhat  in  arrears,  as  measured 
by  the  later  advance  in  science  and  technology. 

But  just  now  the  attention  of  thoughtful  men  cen- 


KNOWLEDGE  AND  BELIEF  13 

ters  on  questions  of  practical  concern,  questions  of 
law  and  usage,  brought  to  a  focus  by  the  flagrant 
miscarriage  of  that  organisation  of  Christendom 
that  has  brought  the  War  upon  the  civilised  nations. 
The  paramount  question  just  now  is,  what  to  do  to 
save  the  civilised  nations  from  irretrievable  disaster, 
and  what  further  may  be  accomplished  by  taking 
thought  so  that  no  similar  epoch  of  calamities  shall 
be  put  in  train  for  the  next  generation.  It  is  real- 
ised that  there  must  be  something  in  the  way  of  a 
"  reconstruction  "  of  the  scheme  of  things;  and  it  is 
also  realised,  though  more  dimly,  that  the  recon- 
struction must  be  carried  out  with  a  view  to  the 
security  of  life  under  such  conditions  as  men  will 
put  up  with,  rather  than  with  a  view  to  the  impecca- 
ble preservation  of  the  received  scheme  of  law  and 
custom.  All  of  which  is  only  saying  that  the  con- 
stituent principles  of  the  modern  point  of  view  are  to 
be  taken  under  advisement,  reviewed  and  —  con- 
ceivably —  revised  and  brought  into  line,  in  so  far 
as  these  principles  are  constituent  elements  of  that 
received  scheme  of  law  and  custom  that  is  spoken  of 
as  the  status  quo.  It  is  the  status  quo  in  respect  of 
law  and  custom,  not  in  respect  of  science  and  tech- 
nology or  of  knowledge  and  belief,  that  is  to  be 
brought  under  review.  Law  and  custom,  it  is  be- 
lieved, may  be  revised  to  meet  the  requirements  of 
civilised  men's  knowledge  and  belief;  but  no  man 
of  sound  mind  hopes  to  revise  the  modern  system 
of  knowledge  and  belief  so  as  to  bring  it  all  into  con- 
formity with  the  time-worn  scheme  of  law  and  cus- 
tom of  the  status  quo. 

Therefore  the  bearing  of  this  stabilised  modern 


i4  THE  VESTED  INTERESTS 

point  of  view,  stabilised  in  the  eighteenth  century, 
on  these  questions  of  practical  concern  is  of  present 
interest, —  its  practical  value  as  ground  for  a  rea- 
sonably hopeful  reconstruction  of  the  war-shattered 
scheme  of  use  and  wont;  its  possible  serviceability 
as  a  basis  of  enduring  settlement;  as  well  as  the 
share  which  its  constituent  principles  have  had  in  the 
creation  of  that  status  quo  out  of  which  this  epoch 
of  calamities  has  been  precipitated.  The  status  quo 
ante,  in  which  the  roots  of  this  growth  of  misfor- 
tunes and  impossibilities  are  to  be  found,  lies  within 
the  modern  era,  of  course,  and  it  is  nowise  to  be 
decried  as  an  alien,  or  even  as  an  unforeseen,  out- 
growth of  this  modern  era.  By  and  large,  this 
eighteenth-century  stabilised  modern  point  of  view 
has  governed  men's  dealings  within  this  era,  and  its 
constituent  principles  of  right  and  honest  living  must 
therefore,  presumptively,  be  held  answerable  for 
the  disastrous  event  of  it  all, —  at  least  to  the  extent 
that  they  have  permissively  countenanced  the  growth 
of  those  sinister  conditions  which  have  now  ripened 
into  a  state  of  world-wide  shame  and  confusion. 

How  and  how  far  is  this  modern  point  of  view, 
this  body  of  legal  and  moral  principles  established 
in  the  eighteenth  century,  to  be  accounted  an  acces- 
sory to  this  crime?  And  if  it  be  argued  that  this 
complication  of  atrocities  has  come  on,  not  because 
of  these  principles  of  conduct  which  are  so  dear  to 
civilised  men  and  so  blameless  in  their  sight,  but  only 
in  spite  of  them;  then,  what  is  the  particular  weak- 
ness or  shortcoming  inherent  in  this  body  of  princi- 
ples which  has  allowed  such  a  growth  of  malignant 
conditions  to  go  on  and  gather  head?  If  the  mod- 


KNOWLEDGE  AND  BELIEF          15 

ern  point  of  view,  these  settled  principles  of  conduct 
by  which  modern  men  collectively  are  actuated  in 
what  they  will  do  and  in  what  they  will  permit, —  if 
these  canons  and  standards  of  clean  and  honest  liv- 
ing have  proved  to  be  a  fatal  snare;  then  it  becomes 
an  urgent  question :  Is  it  safe,  or  sane  to  go  into 
the  future  by  the  light  of  these  same  established  can- 
ons of  right,  equity,  and  propriety  that  so  have  been 
tried  and  found  wanting? 

Perhaps  the  question  should  rather  take  the  less 
didactic  form :  Will  the  present  experience  of  calam- 
ities induce  men  to  revise  these  established  princi- 
ples of  conduct,  and  the  specifications  of  the  code 
based  on  them,  so  effectually  as  to  guard  against  any 
chance  of  return  to  the  same  desperate  situation  in 
the  calculable  future?  Can  the  discipline  of  recent 
experience  and  the  insight  bred  by  the  new  order  of 
knowledge  and  belief,  reenforced  by  the  shock  of 
the  present  miscarriage,  be  counted  on  to  bring  such 
a  revision  of  these  principles  of  law  and  custom  as 
will  preclude  a  return  to  that  status  quo  ante  from 
which  this  miscarriage  of  civilisation  has  resulted? 
The  latter  question  is  more  to  the  point.  History 
teaches  that  men,  taken  collectively,  learn  by  habit- 
uation  rather  than  by  precept  and  reflection;  par- 
ticularly as  touches  those  underlying  principles  of 
truth  and  validity  on  which  the  effectual  scheme  of 
law  and  custom  finally  rests. 

In  the  last  analysis  it  resolves  itself  into  a  ques- 
tion as  to  how  and  how  far  the  habituation  of  the 
recent  past,  mobilised  by  the  shock  of  the  present 
conjuncture,  will  have  affected  the  frame  of  mind 
of  the  common  man  in  these  civilised  countries;  for 


1 6  THE  VESTED  INTERESTS 

in  the  last  analysis  and  with  due  allowance  for  a 
margin  of  tolerance  it  is  the  frame  of  mind  of  the 
common  man  that  makes  the  foundation  of  society 
in  the  modern  world;  even  though  the  elder  states- 
men continue  to  direct  its  motions  from  day  to  day 
by  the  light  of  those  principles  that  were  found  good 
some  time  before  yesterday.  And  the  fortunes  of 
the  civilised  world,  for  good  or  ill,  have  come  to 
turn  on  the  deeds  of  commission  and  of  omission  of 
these  advanced  peoples  among  whom  the  frame  of 
mind  of  the  common  man  is  the  finally  conditioning 
circumstance  in  what  may  safely  be  done  or  left  un- 
done. The  advice  and  consent  of  the  common  run 
has  latterly  come  to  be  indispensable  to  the  conduct 
of  affairs  among  civilised  men,  somewhat  in  the  same 
degree  in  which  the  community  is  to  be  accounted 
a  civilised  people.  It  is  indispensable  at  least  in  a 
permissive  way,  at  least  to  the  extent  that  no  line  of 
policy  can  long  be  pursued  successfully  without  the 
permissive  tolerance  of  the  common  run;  and  the 
margin  of  tolerance  in  the  case  appears  to  be  nar- 
rower the  more  alert  and  the  more  matter-of-fact 
the  frame  of  mind  of  the  common  man. 


II 

THE   STABILITY   OF   LAW  AND   CUSTOM 

IN  so  far  as  concerns  the  present  question,  that  is  to 
say  as  regards  those  standards  and  principles  which 
underlie  the  established  system  of  law  and  custom, 
the  modern  point  of  view  was  stabilised  and  given  a 
definitive  formulation  in  the  eighteenth  century;  and 
in  so  far  as  concerns  the  subsequent  conduct  of  prac- 
tical affairs,  its  constituent  principles  have  stood  over 
without  material  change  or  revision  since  that  time. 
So  that  for  practical  purposes  it  is  fair  to  say  that 
the  modern  point  of  view  is  now  some  one  hundred 
and  fifty  years  old. 

It  will  not  do  to  say  that  it  is  that  much  behind 
the  times;  because  its  time-worn  standards  of  truth 
and  validity  are  a  very  material  factor  in  the  make- 
up of  "  our  time."  That  such  is  the  case  is  due  in 
great  part  to  the  fact  that  this  body  of  principles 
was  stabilised  at  that  time  and  that  they  have  there- 
fore stood  over  intact,  in  spite  of  other  changes  that 
have  taken  place.  It  is  only  that  the  principles 
which  had  been  tested  and  found  good  under  the  con- 
ditions of  life  in  the  modern  era  up  to  that  time 
were  at  that  time  held  fast,  canvassed,  defined,  ap- 
proved, and  stabilised  by  being  reduced  to  documen- 
tary form.  In  some  sense  they  were  then  written 

17. 


1 8  THE  VESTED  INTERESTS 

into  the  constitution  of  civilised  society,  and  they 
have  continued  to  make  up  the  nucleus  of  the  doc- 
ument from  that  time  forth;  and  so  they  have  be- 
come inflexible,  after  the  fashion  of  written  consti- 
tutions. 

In  the  sight  of  those  generations  who  so  achieved 
the  definite  acceptance  of  these  enlightened  modern 
principles,  and  who  finally  made  good  their  formal 
installation  in  law  and  usage  as  self-balanced  canons 
of  human  conduct,  the  principles  which  they  so  ar- 
rived at  had  all  the  sanction  of  Natural  Law, —  im- 
personal, dispassionate,  indefeasible  and  immutable; 
fundamentally  and  eternally  right  and  good.  That 
generation  of  men  held  "  these  truths  to  be  self-evi- 
dent " ;  and  they  have  continued  so  to  be  held  since 
that  epoch  by  all  those  peoples  who  make  up  the 
effectual  body  of  modern  civilisation.  And  the 
backward  peoples,  those  others  who  have  since  then 
been  coming  into  line  and  making  their  claim  to  a 
place  in  the  scheme  of  modern  civilised  life,  have 
also  successively  been  accepting  and  (passably)  as- 
similating the  same  enlightened  principles  of  clean 
and  honest  living.  Christendom,  as  a  going  concern 
of  civilised  peoples,  has  continued  to  regulate  its  af- 
fairs by  the  help  of  these  principles,  which  are  still 
held  to  be  a  competent  formulation  of  the  aspira- 
tions of  civilised  mankind.  So  that  these  modern 
principles  of  the  eighteenth  century,  stabilised  in  doc- 
umentary form  a  hundred  and  fifty  years  ago,  have 
stood  over  in  immutable  perfection  until  our  time, — 
a  monument  more  enduring  than  brass. 

These  principles  are  of  the  nature  of  habits  of 
thought,  of  course;  and  it  is  the  nature  of  habits  of 


LAW  AND  CUSTOM  19 

thought  forever  to  shift  and  change  in  response  to 
the  changing  impact  of  experience,  since  they  are 
creatures  of  habituation.  But  inasmuch  as  they 
have  once  been  stabilised  in  a  thoroughly  competent 
fashion  in  the  eighteenth  century,  and  have  been 
drafted  into  finished  documentary  form,  they  have 
been  enabled  to  stand  over  unimpaired  into  the  pres- 
ent with  all  that  weight  <and  stability  that  a  well-de- 
vised documentary  formulation  will  give.  It  is  true, 
so  far  as  regards  the  conditions  of  civilised  life  dur- 
ing the  interval  that  has  passed  since  these  modern 
principles  of  law  and  custom  took  on  their  settled 
shape  in  the  eighteenth  century,  it  has  been  a  period 
of  unexampled  change, —  swift,  varied,  profound 
and  extensive  beyond  example.  And  it  follows  of 
necessity  that  the  principles  of  conduct  which  were 
approved  and  stabilised  in  the  eighteenth  century,  un- 
der the  driving  exigencies  of  that  age,  have  not  alto- 
gether escaped  the  complications  of  changing  circum- 
stances. They  have  at  least  come  in  for  some 
shrewd  interpretation  in  the  course  of  the  nineteenth 
century.  There  have  been  refinements  of  definition, 
extensions  of  application,  scrutiny  and  exposition  of 
implications,  as  new  exigencies  have  arisen  and  the 
established  canons  have  been  required  to  cover  un- 
foreseen contingencies;  but  it  has  all  been  done  with 
the  explicit  reservation  that  no  material  innovation 
shall  be  allowed  to  touch  the  legacy  of  modern  prin- 
ciples handed  down  from  the  eighteenth  century,  and 
that  the  vital  system  of  Natural  Rights  installed  in 
the  eighteenth  century  must  not  be  deranged  at  any 
point  or  at  any  cost. 


20  THE  VESTED  INTERESTS 

It  is  scarcely  necessary  to  describe  this  modern 
system  of  principles  that  still  continues  to  govern  hu- 
man intercourse  among  the  civilised  peoples,  or  to 
attempt  an  exposition  of  its  constituent  articles.  It 
is  all  to  be  had  in  exemplary  form,  ably  incorporated 
in  such  familiar  documents  as  the  American  Declara- 
tion of  Independence,  the  French  Declaration  of  the 
Rights  of  Man,  and  the  American  Constitution;  and 
it  is  all  to  be  found  set  forth  with  all  the  circum- 
stance of  philosophical  and  juristic  scholarship  in  the 
best  work  of  such  writers  as  John  Locke,  Montes- 
quieu, Adam  Smith,  or  Blackstone.  It  has  all  been 
sufficiently  canvassed,  through  all  its  dips,  spurs  and 
angles,  by  the  most  competent  authorities,  who  have 
brought  their  best  will  and  their  best  abilities  to 
bear  on  its  elucidation  at  every  point,  with  full  doc- 
umentation. Besides  which,  there  is  no  need  of  re- 
condite exposition  for  the  present  purpose;  since  all 
that  is  required  by  the  present  argument  is  such  a  de- 
gree of  information  on  these  matters  as  is  familiar 
to  English-speaking  persons  by  common  notoriety. 

At  the  same  time  it  may  be  to  the  purpose  to  call 
to  mind  that  this  secular  profession  of  faith  enters 
creatively  into  that  established  order  of  things  which 
has  now  fallen  into  a  state  of  havoc  because  it  does 
not  meet  the  requirements  of  the  new  order.  This 
eighteenth-century  modern  plan  specifically  makes 
provision  for  certain  untoward  rights,  perquisites 
and  disabilities  which  have,  in  the  course  of  time  and 
shifting  circumstance,  become  incompatible  with  con- 
tinued peace  on  earth  and  good-will  among  men. 

There  are  two  main  counts  included  in  this  mod- 
ern —  eighteenth-century  —  plan,  which  appear  un- 


LAW  AND  CUSTOM  21 

remittingly  to  make  for  discomfort  and  dissension 
under  the  conditions  offered  by  the  New  Order  of 
things :  —  National  Ambition,  and  the  Vested  Rights 
of  ownership.  Neither  of  the  two  need  be  con- 
demned as  being  intrinsically  mischievous.  Indeed, 
it  may  be  true,  as  has  often  been  argued,  that  both 
have  served  a  good  purpose  in  their  due  time  and 
place;  at  least  there  is  no  need  of  arguing  the  con- 
trary. Both  belong  in  the  settled  order  of  civilised 
life;  and  both  alike  are  countenanced  by  those  prin- 
ciples of  truth,  equity  and  validity  that  go  to  make 
up  the  modern  point  of  view.  It  is  only  that  now, 
as  things  have  been  turning  during  the  later  one  hun- 
dred years,  both  of  these  immemorially  modern 
rights  of  man  have  come  to  yield  a  net  return  of 
hardship  and  ill-will  for  all  those  peoples  who  have 
bound  up  their  fortunes  with  that  kind  of  enterprise. 
The  case  might  be  stated  to  this  effect,  that  the  fault 
lies  not  in  the  nature  of  these  untoward  institutions 
of  national  sovereignty  and  vested  rights,  nor  in 
those  principles  of  self-help  which  underlie  them,  but 
only  in  those  latterday  facts  which  stubbornly  refuse 
to  fall  into  such  lines  as  these  forms  of  human  enter- 
prise require  for  their  perfect  and  beneficent  work- 
ing. The  facts,  particularly  the  facts  of  industry 
and  science,  have  outrun  these  provisions  of  law 
and  custom;  and  so  the  scheme  of  things  has  got  out 
of  joint  by  that  much,  through  no  inherent  weakness 
in  the  underlying  principles  of  law  and  custom.  The 
ancient  and  honorable  principles  of  self-help  are  as 
sound  as  ever;  it  is  only  that  the  facts  have  quite 
unwarrantably  not  remained  the  same.  The  fault 
lies  in  the  latterday  facts,  which  have  not  continued 


22  THE  VESTED  INTERESTS 

in  suitable  shape.  Such,  in  effect,  has  been  the  view 
habitually  spoken  for  by  many  thoughtful  persons 
of  a  conservative  turn,  who  take  an  interest  in  con- 
certing measures  for  holding  fast  that  which  once 
was  good,  in  the  face  of  distasteful  facts. 

The  vested  right  of  ownership  in  all  kinds  of  prop- 
erty has  the  sanction  of  the  time-honored  principles 
of  individual  self-direction,  equal  opportunity,  free 
contract,  security  of  earnings  and  belongings, — 
self-help,  in  the  simple  and  honest  meaning  of  the 
word.  It  would  be  quite  bootless  to  find  fault  with 
these  reasonable  principles  of  tolerance  and  security. 
Their  definitive  acceptance  and  stabilisation  in  the 
eighteenth  century  are  among  the  illustrious  achieve- 
ments of  Western  civilisation;  and  their  roots  lie 
deep  in  the  native  wisdom  of  mankind.  They  are 
obvious  corollaries  under  the  rule  of  Live  and  let 
live, —  an  Occidental  version  of  the  Golden  Rule. 
Yet  in  practical  effect  those  vested  rights  which  rest 
blamelessly  on  these  reasonable  canons  of  tolerance 
and  good  faith  have  today  become  the  focus  of  vex- 
ation and  misery  in  the  life  of  the  civilised  peoples. 
Circumstances  have  changed  to  such  effect  that  pro- 
visions which  were  once  framed  to  uphold  a  system 
of  neighborly  good-will  have  now  begun  to  run  coun- 
ter to  one  another  and  are  working  mischief  to  the 
common  good. 

Any  impartial  survey  of  the  past  one-hundred-fifty 
years  will  show  that  the  constituent  principles  of  this 
modern  point  of  view  governing  the  mutual  rights 
and  obligations  of  men  within  the  civilised  nations 
have  held  their  ground,  on  the  whole,  without  ma- 
terial net  gain  or  net  loss.  It  is  the  ground  of  Nat- 


LAW  AND  CUSTOM  23 

ural  Rights,  of  self-help  and  free  bargaining.  Civil 
rights  and  the  perquisites  and  obligations  of  owner- 
ship have  remained  substantially  intact  over  this  in- 
terval of  a  hundred  and  fifty  years,  but  with  some 
slight  advance  in  the  way  of  Live  and  let  live  at  cer- 
tain points,  and  some  slight  retrenchment  at  other 
points.  So  far  as  regards  the  formal  stipulations, 
in  law  and  custom,  the  balance  of  class  interests 
within  these  countries  has,  on  the  whole,  not  been  se- 
riously disturbed.  In  this  system  of  Natural  Rights, 
as  it  has  worked  out  in  practice,  the  rights  of  owner- 
ship are  paramount;  largely  because  the  other  per- 
sonal rights  in  the  case  have  come  to  be  a  matter  of 
course  and  so  have  ceased  to  hold  men's  attention. 

So,  in  the  matter  of  the  franchise,  e.  g.,  the  legal 
provisions  more  nearly  meet  the  popular  ideals  of 
the  modern  point  of  view  today  than  ever  before. 
On  the  other  hand  the  guiding  principles  in  the  case 
at  certain  other  points  have  undergone  a  certain  re- 
finement of  interpretation  with  a  view  to  greater 
ease  and  security  for  trade  and  investment;  and 
there  has,  in  effect,  been  some  slight  abridgement  of 
the  freedom  of  combination  and  concerted  action  at 
any  point  where  an  unguarded  exercise  of  such  free- 
dom would  hamper  trade  or  curtail  the  profits  of 
business, —  for  the  modern  era  has  turned  out  to  be 
an  era  of  business  enterprise,  dominated  by  the  par- 
amount claims  of  trade  and  investment.  In  point  of 
formal  requirements,  these  restrictions  imposed  on 
concerted  action  "  in  restraint  of  trade  "  fall  in  equal 
measure  on  the  vested  interests  engaged  in  business 
and  on  the  working  population  engaged  in  industry. 
So  that  the  measures  taken  to  safeguard  the  natural 


24  THE  VESTED  INTERESTS 

rights  of  ownership  apply  with  equal  force  to  those 
who  own  and  those  who  do  not.  '  The  majestic 
equality  of  the  law  forbids  the  rich  as  well  as  the 
poor  to  sleep  under  bridges  or  to  beg  on  the  street 
corners."  But  it  has  turned  out  on  trial  that  the 
vested  interests  of  business  are  not  seriously  ham- 
pered by  these  restrictions;  inasmuch  as  any  formal 
restriction  on  any  concerted  action  between  the  own- 
ers of  such  vested  interests  can  always  be  got  around 
by  a  formal  coalition  of  ownership  in  the  shape  of  a 
corporation.  The  extensive  resort  to  corporate 
combination  of  ownership,  which  is  so  marked  a  fea- 
ture of  the  nineteenth  century,  was  not  foreseen  and 
was  not  taken  into  account  in  the  eighteenth  century, 
when  the  constituent  principles  of  the  modern  point 
of  view  found  their  way  into  the  common  law.  The 
system  of  Natural  Rights  is  a  system  of  personal 
rights,  among  which  the  rights  of  ownership  are 
paramount;  and  among  the  rights  of  ownership  is 
the  right  of  free  disposal  and  security  of  ownership 
and  of  credit  obligations. 

The  same  line  of  evasion  is  not  available  in  the 
same  degree  for  concerted  action  between  persons 
who  own  nothing.  Still,  in  neither  case,  neither  as 
regards  the  owners  of  the  country's  wealth  nor  as 
regards  the  common  man,  can  these  restrictions  on 
personal  freedom  of  action  be  said  to  be  a  serious 
burden.  And  any  slight  mutilation  or  abridgement 
of  the  rule  of  self-help  in  their  economic  relations 
has  been  offset  by  an  increasingly  broad  and  liberal 
construction  of  the  principles  of  self-direction  and 
equality  among  men  in  their  civil  capacity  and  their 
personal  relations.  Indeed,  the  increasingly  exact- 


LAW  AND  CUSTOM  25 

ing  temper  of  the  common  man  in  these  countries 
during  this  period  has  made  such  an  outcome  una- 
voidable. By  and  large,  in  its  formal  vindication  of 
personal  liberty  and  equality  before  the  law,  the 
modern  point  of  view  has  with  singular  consistency 
remained  intact  in  the  shape  in  which  its  principles 
were  stabilised  in  the  eighteenth  century,  in  spite  of 
changing  circumstances.  In  point  of  formal  compli- 
ance with  their  demands,  the  enlightened  ideals  of 
the  eighteenth  century  are,  no  doubt,  more  com- 
monly realised  in  practice  today  than  at  any  earlier 
period.  So  that  the  modern  civilised  countries  are 
now,  in  point  of  legal  form  and  perhaps  also  in  prac- 
tical effect,  more  nearly  a  body  of  ungraded  and 
masterless  men  than  any  earlier  generation  has 
known  how  to  be. 

In  this  modern  era,  as  well  as  elsewhere  and  in 
other  times,  the  circumstances  that  make  for  change 
and  reconstruction  have  been  chiefly  the  material  cir- 
cumstances of  everyday  life, —  circumstances  affect- 
ing the  ordinary  state  of  industry  and  ordinary  in- 
tercourse. These  material  circumstances  have 
changed  notably  during  the  modern  era.  There  has 
been  a  progressive  change  in  the  state  of  the  indus- 
trial arts,  which  has  materially  altered  the  scope  an3 
method  of  industry  and  the  conditions  under  which 
men  live  in  all  the  civilised  countries.  Accordingly, 
as  a  point  of  comparison,  it  will  be  to  the  purpose  to 
call  to  mind  what  were  the  material  circumstances, 
and  more  particularly  the  state  of  the  industrial  arts, 
which  underlay  and  gave  character  to  the  modern 
point  of  view  at  the  period  when  its  constituent  prin- 


26  THE  VESTED  INTERESTS 

ciples  were  found  good  and  worked  out  as  a  stable 
and  articulate  system,  in  the  shape  in  which  they 
have  continued  to  be  held  since  then. 

The  material  conditions  of  industry,  trade  and 
daily  life  during  the  period  of  transition  and  ap- 
proach to  this  modern  ground  created  that  frame  of 
mind  which  we  call  the  modern  point  of  view  and 
dictated  that  reconstruction  of  institutional  arrange- 
ments which  has  been  worked  out  under  its  guidance. 
Therefore  the  economic  situation  which  so  underlay 
and  conditioned  this  modern  point  of  view  at  the  per- 
iod when  it  was  given  its  stable  form  becomes  the 
necessary  point  of  departure  for  any  argument  bear- 
ing on  the  changes  that  have  been  going  forward 
since  then,  or  on  any  prospective  reconstruction  that 
may  be  due  to  follow  from  these  changed  conditions 
in  the  calculable  future. 

On  this  head,  the  students  of  history  are  in  a  sin- 
gularly fortunate  position.  The  whole  case  is  set 
forth  in  the  works  of  Adam  Smith,  with  a  compre- 
hension and  lucidity  which  no  longer  calls  for  praise. 
Beyond  all  other  men  Adam  Smith  is  the  approved 
and  faithful  spokesman  of  this  modern  point  of  view 
in  all  that  concerns  the  economic  situation  which  it 
assumes  as  its  material  ground;  and  his  description 
of  the  state  of  civilised  society,  trade  and  industry, 
as  he  saw  it  in  his  time  and  as  he  wished  it  to  stand 
over  into  the  future,  is  to  be  taken  without  abate- 
ment as  a  competent  exposition  of  those  material 
conditions  which  were  then  conceived  to  underlie  civ- 
ilised society  and  to  dictate  the  only  sound  recon- 
struction of  civil  and  economic  institutions  according 
to  the  modern  plan. 


LAW  AND  CUSTOM  27 

But  like  other  men,  Adam  Smith  was  a  creature  of 
his  own  time,  and  what  he  has  to  say  applies  to  the 
state  of  things  as  he  saw  them.  What  he  describes 
and  inquires  into  is  that  state  of  things  which  was 
to  him  the  "historical  present";  which  always  sig- 
nifies the  recent  past, —  that  is  to  say,  the  past  as  it 
had  come  under  his  observation  and  as  it  had  shaped 
his  outlook. 

As  it  is  conventionally  dated,  the  Industrial  Revo- 
lution took  effect  within  Adam  Smith's  active  life- 
time, and  some  of  its  more  significant  beginnings 
passed  immediately  under  his  eyes;  indeed,  it  is  re- 
lated that  he  took  an  active  personal  interest  in  at 
least  one  of  the  epoch-making  mechanical  inventions 
from  which  the  era  of  the  machine  industry  takes  its 
date.  Yet  the  Industrial  Revolution  does  not  lie 
within  Adam  Smith's  "  historical  present,"  nor  does 
his  system  of  economic  doctrines  make  provision  for 
any  of  its  peculiar  issues.  What  he  has  to  say  on 
the  mechanics  of  industry  is  conceived  in  terms  de- 
rived from  an  older  order  of  things  than  that  ma- 
chine industry  which  was  beginning  to  get  under 
way  in  his  own  life-time;  and  all  his  illustrative  in- 
stances and  arguments  on  trade  and  industry  are  also 
such  as  would  apply  to  the  state  of  things  that  was 
passing,  but  they  are  not  drawn  with  any  view  to  that 
new  order  which  was  then  coming  on  in  the  world 
of  business  enterprise. 

The  economic  situation  contemplated  by  Adam 
Smith  as  the  natural  (and  ultimate)  state  of  industry 
and  trade  in  any  enlightened  society,  conducted  on 
sane  and  sound  lines  according  to  the  natural  order 
of  human  relations,  was  of  a  simple  structure  and 


28  THE  VESTED  INTERESTS 

may  be  drawn  in  few  lines, —  neglecting  such  minor 
extensions  and  exceptions  as  would  properly  be  taken 
account  of  in  any  exhaustive  description.     Industry 
is  conceived  to  be  of  the  nature  of  handicraft;  not 
of  the  nature  of  mechanical  engineering,  such  as  it 
has  in  effect  and  progressively  come  to  be  since  his 
time.     It  is  described  as  a  matter  of  workmanlike 
labor,  "  and  of  the  skill,  dexterity  and  judgment  with 
which  it  is  commonly  applied."     It  is  a  question  of 
the  skilled  workman  and  his  use  of  tools.     Mechan- 
ical inventions   are   "  labor-saving  devices,"   which 
"  facilitate    and    abridge    labor."     The    material 
equipment  is  the  ways  and  means  by  manipulation  of 
which  the  workman  gets  his  work  done.     "  Capital 
stock  "  is  spoken  of  as  savings  parsimoniously  ac- 
cumulated out  of  the  past  industry  of  its  owner,  or 
out  of  the  industry  of  those  persons  from  whom  he 
has  legally  acquired  it  by  inheritance  or  in  exchange 
for  the  products  of  his  own  labor.     Business  is  of 
the  nature  of  "  petty  trade"  and  the  business  man  is 
a  "  middle  man  "  who  is  employed  for  a  livelihood 
in    the    distribution    of    goods    to    the    consumers. 
Trade  is  subsidiary  to  industry,  and  money  is  a  ve- 
hicle designed  to  be  used  for  the  distribution  of 
goods.     Credit  is  an  expedient  of  the  needy;  a  du- 
bious  expedient.     Profits    (including   interest)    are 
justified  as  a  reasonable  remuneration  for  productive 
work  done,  and  for  the  labor-saving  use  of  property 
derived  from  the  owner's  past  labor.     The  efforts 
of  masters  and  workmen  alike  are  conceived  to  be 
bent  on  turning  out  the  largest  and  most  serviceable 
output  of  goods;  and  prices  are  competitively  deter- 
mined by  the  labor-cost  of  the  goods. 


LAW  AND  CUSTOM  29 

Like  other  men  Adam  Smith  did  not  see  into  the 
future  beyond  what  was  calculable  on  the  data  given 
by  his  own  historical  present;  and  in  his  time  that 
later  and  greater  era  of  investment  and  financial  en- 
terprise which  has  made  industry  subsidiary  to  bus- 
iness was  only  beginning  to  get  under  way  and  only 
obscurely  so.  So  that  he  was  still  able  to  think  of 
commercial  enterprise  as  a  middle-man's  traffic  in 
merchandise,  subsidiary  to  a  small-scale  industry  on 
the  order  of  handicraft,  and  due  to  an  assumed  pro- 
pensity in  men  "  to  truck,  barter,  and  exchange  one 
thing  for  another."  And  so  much  as  he  could  not 
help  seeing  of  the  new  order  of  business  enterprise 
which  was  coming  in  was  not  rated  by  him  as  a  sane 
outgrowth  of  that  system  of  Natural  Liberty  for 
which  he  spoke  and  about  which  his  best  affections 
gathered.  In  all  this  he  was  at  one  with  his  thought- 
ful contemporaries. 

That  generation  of  public-spirited  men  went,  per- 
force, on  the  scant  data  afforded  by  their  own  his- 
torical present,  the  economic  situation  as  they  saw 
it  in  the  perspective  and  with  the  preconceptions  of 
their  own  time;  and  to  them  it  was  accordingly  plain 
that  when  all  unreasonable  restrictions  are  taken 
away,  "  the  obvious  and  simple  system  of  natural  lib- 
erty establishes  itself  of  its  own  accord."  To  this 
"  natural  "  plan  of  free  workmanship  and  free  trade 
all  restraint  or  retardation  by  collusion  among  bus- 
iness men  was  wholly  obnoxious,  and  all  collusive 
control  of  industry  or  of  the  market  was  accordingly 
execrated  as  unnatural  and  subversive.  It  is  true, 
there  were  even  then  some  appreciable  beginnings  of 
coercion  and  retardation  —  lowering  of  wages  and 


30  THE  VESTED  INTERESTS 

limitation  of  output  —  by  collusion  between  owners 
and  employers  who  should  by  nature  have  been  com- 
petitive producers  of  an  unrestrained  output  of 
goods  and  services  according  to  the  principles  of  that 
modern  point  of  view  which  animated  Adam  Smith 
and  his  generation;  but  coercion  and  unearned  gain 
by  a  combination  of  ownership,  of  the  now  familiar 
corporate  type,  was  virtually  unknown  in  his  time. 
So  Adam  Smith  saw  and  denounced  the  dangers  of 
unfair  combination  between  "  masters  "  for  the  ex- 
ploitation of  their  workmen,  but  the  modern  use  of 
credit  and  corporation  finance  for  the  collective  con- 
trol of  the  labor  market  and  the  goods  market  of 
course  does  not  come  within  his  horizon  and  does 
not  engage  his  attention. 

So  also  Adam  Smith  knows  and  denounces  the  use 
of  protective  tariffs  for  private  gain.  That  means 
of  pilfering  was  familiar  enough  in  his  time.  But 
he  spends  little  indignation  on  the  equally  nefarious 
use  of  the  national  establishment  for  safeguarding 
and  augmenting  the  profits  of  traders,  concession- 
aires, investors  and  creditors  in  foreign  parts  at  the 
cost  of  the  home  community.  That  method  of  tax- 
ing the  common  man  for  the  benefit  of  the  vested 
interests  has  also  grown  to  more  formidable  propor- 
tions since  his  time.  The  constituent  principles  of 
the  modern  point  of  view,  as  accepted  advisedly  or 
by  oversight  by  Adam  Smith  and  his  generation, 
supply  all  the  legitimation  required  for  this  larce- 
nous use  of  the  national  establishment;  but  the  means 
of  communication  were  still  too  scant,  and  the  larger 
use  of  credit  was  too  nearly  untried,  as  contrasted 
with  what  has  at  a  later  date  gone  to  make  the  com- 


LAW  AND  CUSTOM  31 

mercial  ground  and  incentive  of  imperialist  politics. 
Therefore  the  imperialist  policies  of  public  enter- 
prise for  private  gain  also  do  not  come  greatly 
within  the  range  of  Adam  Smith's  vision  of  the  fu- 
ture, nor  does  the  "  obvious  and  simple  system  "  on 
which  he  and  his  generation  of  thoughtful  men  take 
their  stand  comprise  anything  like  explicit  declara- 
tions for  or  against  this  later-matured  chicane  of  the 
gentlemen-investors  who  have  been  managing  the 
affairs  of  the  civilised  nations. 

Adam  Smith's  work  and  life-time  falls  in  with  the 
high  tide  of  eighteenth-century  insight  and  under- 
standing, and  it  marks  an  epoch  of  spiritual  achieve- 
ment and  stabilisation  in  civil  institutions,  as  well 
as  in  those  principles  of  conduct  that  have  governed 
economic  rights  and  relations  since  that  date.  But 
it  marks  also  the  beginning  of  a  new  order  in  the 
state  of  the  industrial  arts  as  well  as  in  those  mate- 
rial sciences  which  come  directly  in  touch  with  the 
industrial  arts  and  which  take  their  logical  bent  from 
the  same  range  of  tangible  experience.  So  it  hap- 
pens that  this  modern  point  of  view  reached  a  stable 
and  symmetrical  finality  about  the  same  date  when 
the  New  Order  of  experience  and  insight  was  be- 
ginning to  bend  men's  habits  of  thought  into  lines 
that  run  at  cross  purposes  with  this  same  stabilised 
point  of  view.  It  is  in  the  ways  and  means  of  in- 
dustry and  in  the  material  sciences  that  the  new 
order  of  knowledge  and  belief  first  comes  into  evi- 
dence; because  it  is  in  this  domain  of  workday  facts 
that  men's  experience  began  about  that  time  to  take 
a  decisive  turn"  at  variance  with  the  received  canons. 


32  THE  VESTED  INTERESTS 

A  mechanistic  conception  of  things  began  to  displace 
those  essentially  romantic  notions  of  untrammeled 
initiative  and  rationality  that  governed  the  intellec- 
tual life  of  the  era  of  enlightenment  which  was  then 
drawing  to  a  close. 

It  is  logically  due  to  follow  that  the  same  general 
principles  of  knowledge  and  validity  will  presently 
undergo  a  revision  of  the  same  character  where  they 
have  to  do  with  those  imponderable  facts  of  human 
conduct  and  those  conventions  of  law  and  custom 
that  govern  the  duties  and  obligations  of  men  in  so- 
ciety. Here  and  now  as  elsewhere  and  in  other 
times  the  stubborn  teaching  that  comes  of  men's  ex- 
perience with  the  tangible  facts  of  industry  should 
confidently  be  counted  on  to  make  the  outcome,  so 
as  to  bring  on  a  corresponding  revision  of  what  is 
right  and  good  in  that  world  of  make-believe  that 
always  underlies  any  established  system  of  law  and 
custom.  The  material  exigencies  of  the  state  of  in- 
dustry are  unavoidable,  and  in  great  part  unbending; 
and  the  economic  conditions  which  follow  imme- 
diately from  these  exigencies  imposed  by  the  ways 
and  means  of  industry  are  only  less  uncompromising 
than  the  mechanical  facts  of  industry  itself.  And 
the  men  who  live  under  the  rule  of  these  economic 
exigencies  are  constrained  to  make  their  peace  with 
them,  to  enter  into  such  working  arrangements  with 
one  another  as  these  unbending  conditions  of  the 
state  of  the  industrial  arts  will  tolerate,  and  to  cast 
their  system  of  imponderables  on  lines  which  can  be 
understood  by  the  same  men  who  understand  the  in- 
dustrial arts  and  the  system  of  material  science  which 
underlies  the  industrial  arts.  So  that,  in  due  course, 


LAW  AND  CUSTOM  33 

the  accredited  schedule  of  legal  and  moral  rights, 
perquisites  and  obligations  will  also  presently  be 
brought  into  passable  consistency  with  the  ways  and 
means  whereby  the  community  gets  its  living. 

But  it  is  also  logically  to  be  expected  that  any  re- 
vision of  the  established  rights,  obligations,  perqui- 
sites and  vested  interests  will  trail  along  behind  the 
change  which  has  taken  effect  in  the  material  circum- 
stances of  the  community  and  in  the  community's 
knowledge  and  belief  with  regard  to  these  material 
circumstances;  since  any  such  revision  of  ancient 
rights  and  perquisites  will  necessarily  be  consequent 
upon  and  conditioned  by  that  change,  and  since  the 
axioms  of  law  and  custom  that  underlie  any  estab- 
lished schedule  of  rights  and  perquisites  are  always 
of  the  nature  of  make-believe;  and  the  make-believe 
is  necessarily  built  up  out  of  conceptions  derived 
from  the  accustomed  range  of  knowledge  and  be- 
lief. 

Out-worn  axioms  of  this  make-believe  order  be- 
come superstitions  when  the  scope  and  method  of 
workday  knowledge  has  outgrown  that  particular 
range  of  preconceptions  out  of  which  these  make- 
believe  axioms  are  constructed;  which  comes  to  say- 
ing that  the  underlying  principles  of  the  system  of 
law  and  morals  are  therewith  caught  in  a  process  of 
obsolescence, — u  depreciation  by  supersession  and 
disuse."  By  a  figure  of  speech  it  might  be  said  that 
the  community's  intangible  assets  embodied  in  this 
particular  range  of  imponderables  have  shrunk  by 
that  much,  through  the  decay  of  these  impondera- 
bles that  are  no  longer  seasonable,  and  through  their 
displacement  by  other  figments  of  the  human  brain, 


34  THE  VESTED  INTERESTS 

—  a  consensus  of  brains  trained  into  closer  conso- 
nance with  the  latterday  material  conditions  of  life. 
Something  of  this  kind,  something  in  the  way  of  de- 
preciation by  displacement,  appears  now  to  be  over- 
taking that  system  of  imponderables  that  has  been 
handed  down  into  current  law  and  custom  out  of 
that  range  of  ideas  and  ideals  that  had  the  vogue  be- 
fore the  coming  of  the  machine  industry  and  the  ma- 
terial sciences. 

Since  the  underlying  principles  of  the  established 
order  are  of  this  make-believe  character,  that  is  to 
say,  since  they  are  built  up  out  of  the  range  of  con- 
ceptions that  have  habitually  been  doing  duty  as  the 
substance  of  knowledge  and  belief  in  the  past,  it  fol- 
lows in  the  nature  of  the  case  that  any  reconstruction 
of  institutions  will  be  made  only  tardily,  reluctantly, 
and  sparingly;  inasmuch  as  settled  habits  of  thought 
are  given  up  tardily,  reluctantly  and  sparingly.  And 
this  will  particularly  be  true  when  the  reconstruction 
of  unseasonable  institutions  runs  counter  to  a  set- 
tled and  honorable  code  of  ancient  principles  and  a 
stubborn  array  of  vested  interests,  as  in  this  instance. 
Such  is  the  promise  of  the  present  situation,  and  such 
is  also  the  record  of  the  shift  that  was  once  before 
made  from  medieval  to  modern  times.  It  should  be 
a  case  of  break  or  bend. 


Ill 

THE   STATE   OF   THE   INDUSTRIAL   ARTS 

THE  modern  point  of  view,  with  its  constituent  prin- 
ciples of  equal  opportunity,  self-help,  and  free  bar- 
gaining, was  given  its  definitive  formulation  in  the 
eighteenth  century,  as  a  balanced  system  of  Natural 
Rights;  and  it  has  stood  over  intact  since  that  time, 
and  has  served  as  the  unquestioned  and  immutable 
ground  of  public  morals  and  expediency,  on  which 
the  advocates  of  enlightened  and  liberal  policies  have 
always  been  content  to  rest  in  their  case.  The  truths 
which  it  holds  to  be  self-evident  and  indefeasible  are 
conceived  to  be  intrinsically  bound  up  in  an  over-rul- 
ing Order  of  Nature;  in  which  thoughtful  men  ha- 
bitually believed  at  that  time  and  in  which  less 
thoughtful  men  have  continued  to  believe  since  then. 
This  eighteenth-century  order  of  nature,  in  the  magic 
name  of  which  Adam  Smith  was  in  the  habit  of 
speaking,  was  conceived  on  lines  of  personal  initia- 
tive and  activity.  It  is  an  order  of  things  in  which 
men  were  conceived  to  be  effectually  equal  in  all 
those  respects  that  are  of  any  decided  consequence, 
—  in  intelligence,  working  capacity,  initiative,  op- 
portunity, and  personal  worth;  in  which  the  creative 
factor  engaged  in  industry  was  the  workman,  with 
his  personal  skill,  dexterity  and  judgment;  in  which, 
it  was  believed,  the  employer  ("master")  served 

35 


36 

his  own  ends  and  sought  his  own  gain  by  consistently 
serving  the  needs  of  creative  labor,  and  thereby 
serving  the  common  good;  in  which  the  traders 
("middle-men")  made  an  honest  living  by  supply- 
ing goods  to  consumers  at  a  price  determined  by 
labor  cost,  and  so  serving  the  common  good. 

This  characterisation  of  the  "  obvious  and  sim- 
ple system  "  that  lies  at  the  root  of  the  liberal  ideals 
may  seem  too  much  of  a  dream  to  any  person  who 
shuns  "the  scientific  use  of  the  imagination";  its 
imponderables  may  seem  to  lack  that  axiomatic  self- 
sufficiency  which  one  would  like  to  find  in  the  spirit- 
ual foundations  of  a  working  system  of  law  and  cus- 
tom. Indeed,  the  best  of  its  imponderables  are  in 
a  fair  way  now  to  drop  back  into  the  discard  of  uncer- 
tified make-believe.  But  in  point  of  historical  fact 
it  appears  to  have  stood  the  test  of  time  and  use, 
so  far  as  appears  formally  on  the  face  of  law  and 
custom.  For  a  hundred  years  and  more  it  has  con- 
tinued to  stand  as  a  familiar  article  of  faith  and  as- 
piration among  the  advocates  of  a  Liberal  policy  in 
civil  and  economic  affairs;  and  Adam  Smith's  follow- 
ers —  the  economists  and  publicists  of  the  Liberal 
movement  —  have  spoken  for  it  as  being  the  normal 
system  of  economic  life,  the  "  natural  state  of  man," 
from  which  the  course  of  events  has  been  conceived 
to  depart  only  under  pressure  of  "  disturbing 
causes,"  and  to  which  the  course  of  events  must  be 
pruned  back  at  all  hazards  in  the  event  of  any  threat- 
ened advance  or  departure  beyond  the  "  natural  " 
bounds  set  by  this  working  ideal. 

However,  the  subsequent  course  of  events  has 
shown  no  indisposition  to  depart  from  this  normal 


INDUSTRIAL  ARTS  37 

system  of  economic  life,  this  "  natural  state  of 
man,"  on  the  effectual  reality  of  which  the  modern 
point  of  view  rests  its  inviolate  principles  of  law 
and  morals  and  economic  expediency.  A  new  order 
of  things  has  been  taking  effect  in  the  state  of  the  in- 
dustrial arts  and  in  the  material  sciences  that  lie 
nearest  to  that  tangible  body  of  experience  out  of 
which  the  state  of  the  industrial  arts  is  framed. 
And  the  new  order  of  industrial  ways  and  means  has 
been  progressively  going  out  of  touch  with  the  es- 
sential requirements  of  this  established  scheme  of 
individual  self-help  and  personal  initiative,  on  the 
realisation  and  maintenance  of  which  the  best  en- 
deavors of  the  Liberals  have  habitually  been  spent. 
Under  the  new  order  the  first  requisite  of  ordi- 
nary productive  industry  is  no  longer  the  work- 
man and  his  manual  skill,  but  rather  the  mechan- 
ical equipment  and  the  standardised  processes  in 
which  the  mechanical  equipment  is  engaged.  And 
this  latterday  industrial  equipment  and  process 
embodies  not  the  manual  skill,  dexterity  and  judg- 
ment of  an  individual  workman,  but  rather  the  ac- 
cumulated technological  wisdom  of  the  community. 
Under  the  new  order  of  things  the  mechanical  equip- 
ment —  the  "  industrial  plant  "  —  takes  the  initia- 
tive, sets  the  pace,  and  turns  the  workman  to  account 
in  the  carrying-on  of  those  standardised  processes 
of  production  that  embody  this  mechanistic  state  of 
the  industrial  arts ;  very  much  as  the  individual  crafts- 
man in  his  time  held  the  initiative  in  industry,  set 
the  pace,  and  made  use  of  his  tools  according  to  his 
own  discretion  in  the  exercise  of  his  personal  skill, 
dexterity  and  judgment,  under  that  now  obsoles- 


3 8  THE  VESTED  INTERESTS 

cent  industrial  order  which  underlies  the  eighteenth- 
century  modern  point  of  view,  and  which  still  colors 
the  aspirations  of  Liberal  statesmen  and  economists, 
as  well  as  the  standard  economic  theories. 

The  workman  —  and  indeed  it  is  still  the  skilled 
workman  —  is  always  indispensable  to  the  due  work- 
ing of  this  mechanistic  industrial  process,  of  course; 
very  much  as  the  craftsman's  tools,  in  his  time,  were 
indispensable  to  the  work  which  he  had  in  hand. 
But  the  unit  of  industrial  organization  and  proce- 
dure, what  may  be  called  the  "  going  concern  "  in  pro- 
duction, is  now  the  outfit  of  industrial  equipment,  a 
works,  engaged  in  a  given  standardised  mechanical 
process  designed  to  turn  out  a  given  output  of  stand- 
ardised product;  it  is  the  plant,  or  the  shop.  And 
under  this  new  order  of  industrial  methods  and  val- 
ues it  has  already  come  to  be  a  commonplace  of 
popular  "  knowledge  and  belief  "  that  the  mechani- 
cal equipment  is  the  creative  factor  in  industry,  and 
the  "  production  "  of  the  output  is  credited  to  the 
plant's  working  capacity  and  set  down  to  its  account 
as  a  going  concern;  whereas  the  other  factors  en- 
gaged, as  e.  g.,  workmen  and  materials,  are  counted 
in  as  auxiliary  factors  which  are  indispensable  but 
subsidiary, —  items  of  production-cost  which  are  in- 
corporated in  the  running  expenses  of  the  plant  and 
its  productive  process. 

Under  the  new  order  the  going  concern  in  pro- 
duction is  the  plant  or  shop,  the  works,  not  the 
individual  workman.  The  plant  embodies  a 
standardised  industrial  process.  The  workman  is 
made  use  of  according  as  the  needs  of  the  given  me- 
chanical process  may  require.  The  time,  place, 


INDUSTRIAL  ARTS  39 

rate,  and  material  conditions  of  the  work  in  hand 
are  determined  immediately  by  the  mechanically 
standardised  process  in  which  the  given  plant  is  en- 
gaged; and  beyond  that  all  these  matters  are  de- 
pendent on  the  exigencies  and  manoeuvres  of  busi- 
ness, largely  by  way  of  moderating  the  rate  of  pro- 
duction and  keeping  the  output  reasonably  short  of 
maximum  capacity.  The  workman  has  become  sub- 
sidiary to  the  mechanical  equipment,  and  productive 
industry  has  become  subservient  to  business,  in  all 
those  countries  which  have  come  in  for  the  latterday 
state  of  the  industrial  arts,  and  which  so  have  fallen 
under  the  domination  of  the  price  system. 

Such  is  the  state  of  things  throughout  in  those 
greater  industries  that  are  characteristic  of  the  New 
Order;  and  these  greater  industries  now  set -the  pace 
and  make  the  standards  of  management  and  valua- 
tion for  the  rest.  At  the  same  time  these  greater 
industries  of  the  machine  era  extend  their  domina- 
tion beyond  their  own  immediate  work,  and  enforce 
a  standardisation  of  much  the  same  mechanical  char- 
acter in  the  community  at  large;  in  the  ways  and 
means  of  living  as  well  as  in  the  ways  and  means 
of  work.  The  effects  of  their  mechanically  stand- 
ardised production,  in  the  way  of  goods  and  services 
as  well  as  in  the  similarly  standardised  traffic 
through  which  these  goods  and  services  are  dis- 
tributed to  the  consumers,  reach  out  into  the  every- 
day life  of  all  classes;  but  most  immediately  and  im- 
peratively they  reach  the  working  class  of  the  in- 
dustrial centers.  So  they  largely  set  the  pace  for 
the  ordinary  occupations  of  the  common  man  even 
apart  from  any  employment  in  the  greater  mechani- 


40  THE  VESTED  INTERESTS 

cal  industries.  It  is  especially  the  latterday  sys- 
tem of  transport  and  communication  as  it  works  out 
under  the  new  order  —  highly  mechanical  and  exact- 
ingly  scheduled  for  time,  rate  and  place  —  that  so 
controls  and  standardises  the  ordinary  life  of  the 
common  man  on  mechanical  lines. 

The  training  enforced  by  this  mechanical  stand- 
ardisation, therefore,  is  of  much  the  same  order 
throughout  the  community  as  it  is  within  tKe  me- 
chanical industries  proper,  and  it  drives  to  the  same 
outcome, —  submergence  of  the  personal  equation. 
So  that  the  workday  information  and  the  reasoning 
by  use  of  which  all  men  carry  on  their  daily  life 
under  the  new  order  is  of  the  same  general  char- 
acter as  that  information  and  reasoning  which 
guides  the  mechanical  engineers;  and  the  unremit- 
ting habituation  to  its  scope  and  method,  its  princi- 
ples of  knowledge  and  belief,  leads  headlong  to  a 
mechanistic  conception  of  things,  ways,  means,  ends, 
and  values,  whether  it  is  called  by  that  name  or  not. 
The  resulting  frame  of  mind  is  often  spoken  of  as 
Materialism.  This  impersonal  character  of  work- 
day habituation  is  particularly  to  be  counted  on  to 
take  decisive  effect  wherever  the  latterday  scheme  of 
mechanical  standardisation  takes  effect  with  all  that 
wide  sweep  and  massive  drift  with  which  it  now 
dominates  the  larger  centers  of  population. 

Since  the  modern  era  began,  the  state  of  the  in- 
dustrial arts  has  been  undergoing  a  change  of  type, 
such  as  the  followers  of  Mendel  would  call  a  "  mu- 
tation." And  in  the  course  of  this  mutation  the 
workman  and  his  part  in  the  conduct  of  industry 


INDUSTRIAL  ARTS  41 

have  suffered  as  great  a  dislocation  as  any  of  the 
other  factors  involved.  But  it  is  also  to  be  ad- 
mitted that  the  typical  owner-employer  of  the  earlier 
modern  time,  such  as  he  stood  in  the  mind's  eye  of 
the  eighteenth-century  doctrinaires, —  this  tradi- 
tional owner-employer  has  also  come  through  the 
period  of  the  mutation  in  a  scarcely  better  state  of 
preservation.  At  the  period  of  this  stabilisation  of 
principles  in  the  eighteenth  century,  he  could  still 
truthfully  be  spoken  of  as  a  "  master,"  a  foreman 
of  the  shop,  and  he  was  then  still  invested  with  a 
large  reminiscence  of  the  master-craftsman,  as 
known  in  the  time  of  the  craft-gilds.  He  stood  forth 
in  the  eighteenth-century  argument  on  the  Natural 
Order  of  things  as  the  wise  and  workmanlike  de- 
signer and  guide  of  his  workmen's  handiwork,  and 
he  was  then  still  presumed  to  be  living  in  workday 
contact  and  communion  with  them  and  to  deal  with 
them  on  an  equitable  footing  of  personal  interest. 

Such  a  characterisation  of  the  capitalist-employer 
who  was  doing  business  at  the  time  of  the  Industrial 
Revolution  may  seem  over-drawn;  and  there  is  no 
need  of  insisting  on  its  precise  accuracy  as  a  descrip- 
tion of  eighteenth-century  facts.  But  it  should  not 
be  extremely  difficult  to  show  that  substantially  such 
a  figure  of  an  employer-owner  was  had  in  mind  by 
those  who  then  argued  the  questions  of  wages  and 
employment  and  laid  down  the  lines  on  which  the 
employment  of  labor  would  be  expected  to  arrange 
itself  under  the  untroubled  system  of  natural  lib- 
erty. But  what  is  more  to  the  point  is  that  which  is 
beyond  question.  In  practical  fact,  almost  as  fully 
as  in  the  speculations  of  the  doctrinaires,  the  em- 


42  THE  VESTED  INTERESTS 

ployer  of  labor  in  the  staple  industries  of  that  time 
was,  in  his  own  person,  commonly  also  the  owner  of 
the  establishment  in  which  his  hired  workmen  were 
employed;  and  also  —  again  in  passable  accord  with 
the  facts  —  he  was  presumed  personally  to  come  to 
terms  with -his  workmen  about  wages  and  conditions 
of  work.  Employment  was  considered  to  be  a  re- 
lation of  man  to  man.  That  much  is  explicit  in  the 
writings  which  bear  the  date-mark  of  this  modern 
Liberal  point  of  view;  and  the  same  assumption  has 
continued  to  stand  over  as  a  self-sufficient  premise 
among  the  defenders  of  the  free  competitive  system 
in  industry,  for  three  or  four  generations  after  that 
period. 

But  the  course  of  events  has  gone  its  own  way, 
and  about  that  time  —  somewhere  along  in  the  mid- 
dle half  of  the  eighteenth  century  —  that  type  of 
employer  began  to  be  displaced  in  those  staple  indus- 
tries which  have  since  then  set  the  pace  and  made  the 
outcome  for  wages  and  conditions  of  work.  So 
soon  as  the  machine  industry  began  to  make  head- 
way, the  industrial  plant  increased  in  size,  and  the 
number  of  workmen  employed  in  each  establishment 
grew  continually  larger;  until  in  the  course  of  time 
the  large  scale  of  organisation  in  industry  has  put 
any  relation  of  man  to  man  out  of  the  question  be- 
tween employers  and  workmen  in  the  leading  in- 
dustries. Indeed,  it  is  not  unusual  to  find  that  in 
an  industrial  plant  of  a  large  or  middling  size,  a 
factory,  mill,  works,  mine,  shipyard  or  railway  of 
the  ordinary  sort,  very  few  of  the  workmen  would 
be  able,  under  oath,  to  identify  their  owner.  At  the 
same  time,  and  owing  to  the  same  requirements  of 


INDUSTRIAL  ARTS  43 

large-scale  and  mechanical  organisation,  the  owner- 
ship of  the  works  has  also  progressively  been  chang- 
ing character;  so  that  today,  in  the  large  and  leading 
industries,  the  place  of  the  personal  employer-owner 
is  taken  by  a  composite  business  concern  which  rep- 
resents a  combination  of  owners,  no  one  of  whom  is 
individually  responsible  for  the  concern's  transac- 
tions. So  true  is  this,  that  even  where  the  ownership 
of  a  given  industrial  establishment  still  vests  wholly 
or  mainly  in  a  single  person,  it  has  commonly  been 
found  expedient  to  throw  the  ownership  into  the 
corporate  form,  with  limited  liability. 

The  personal  employer-owner  has  virtually  disap- 
peared from  the  great  industries.  His  place  is  now 
filled  by  a  list  of  corporation  securities  and  a  staff  of 
corporation  officials  and  employees  who  exercise  a 
limited  discretion.  The  personal  note  is  no  longer 
to  be  had  in  the  wage  relation,  except  in  those  back- 
ward, obscure  and  subsidiary  industries  in  which  the 
mechanical  reorganisation  of  the  new  order  has  not 
taken  effect.  So,  even  that  contractual  arrangement 
which  defines  the  workman's  relation  to  the  estab- 
lishment in  which  he  is  employed,  and  to  the  anony- 
mous corporate  ownership  by  which  he  is  employed, 
now  takes  the  shape  of  a  statistical  reckoning,  in 
which  virtually  no  trace  of  the  relation  of  man  to 
man  is  to  be  found.  Yet  the  principles  of  the  mod- 
ern point  of  view  governing  this  contractual  rela- 
tion, in  current  law  and  custom,  are  drawn  on  the 
assumption  that  wages  and  conditions  of  work  are 
arranged  for  by  free  bargaining  between  man  and 
man  on  a  footing  of  personal  understanding  and 
equal  opportunity. 


44  THE  VESTED  INTERESTS 

That  the  facts  of  the  New  Order  have  in  this  way 
departed  from  the  ground  on  which  the  constituent 
principles  of  the  modern  point  of  view  are  based, 
and  on  which  therefore  the  votaries  of  the  estab- 
lished system  take  their  stand, —  this  state  of 
things  can  not  be  charged  to  anyone's  personal  ac- 
count and  made  a  subject  of  recrimination.  In  fact, 
it  is  not  a  case  for  personal  discretion  and  responsi- 
bility in  detail,  but  rather  for  concerted  action  look- 
ing to  some  practicable  working  arrangement. 

The  personal  equation  is  no  longer  a  material 
factor  in  the  situation.  Ownership,  too,  has  been 
caught  in  the  net  of  the  New  Order  and  has  been 
depersonalised  to  a  degree  beyond  what  would  have 
been  conceivable  a  hundred  years  ago,  especially  so 
far  as  it  has  to  do  with  the  use  of  material  resources 
and  man  power  in  the  greater  industries.  Owner- 
ship has  been  "  denatured  "  by  the  course  of  events; 
so  that  it  no  longer  carries  its  earlier  duties  and  re- 
sponsibilities. It  used  to  be  true  that  personally  re- 
sponsible discretion  in  all  details  was  the  chief  and 
abiding  power  conferred  by  ownership;  but  wher- 
ever it  has  to  do  with  the  machine  industry  and 
large-scale  organisation,  ownership  now  has  virtu- 
ally lost  this  essential  part  of  its  ordinary  functions. 
It  has  taken  the  shape  of  an  absentee  ownership  of 
anonymous  corporate  capital,  and  in  the  ordinary 
management  of  this  corporate  capital  the  greater 
proportion  of  the  owners  have  no  voice. 

This  impersonal  corporate  capital,  which  is  tak- 
ing the  place  of  the  personal  employer-owner  of 
earlier  times,  is  the  outcome  of  a  mutation  of  the 
scheme  of  things  in  business  enterprise,  scarcely  less 


INDUSTRIAL  ARTS  45 

profound  than  the  change  which  has  overtaken  the 
material  equipment  in  the  shift  from  handicraft 
methods  to  the  machine  technology.  In  practical 
fact  today,  corporate  capital  is  the  capitalised  earn- 
ing capacity  of  the  corporation  considered  as  a  go- 
ing business  concern;  and  the  ownership  of  this  capi- 
tal therefore  foots  up  to  a  claim  on  the  earnings  of 
the  corporation. 

Corporate  capital  of  this  kind  is  impersonal  in 
more  than  one  sense:  it  may  be  transferred  piece- 
meal from  one  owner  to  another  without  visibly  af- 
fecting the  management  or  the  rating  of  the  con- 
cern whose  securities  change  hands  in  this  way;  and 
the  personal  identity  of  the  owner  of  any  given  block 
of  this  capital  need  not  be  known  even  to  the  con- 
cern itself,  to  its  administrative  officers,  or  to  those 
persons  whose  daily  work  and  needs  are  bound  up 
with  the  daily  transactions  of  the  concern.  For 
most  purposes  and  as  regards  the  greater  proportion 
of  the  investors  who  in  this  way  own  the  corpora- 
tion's capital,  these  owners  are,  in  effect,  anonymous 
creditors,  whose  sole  effectual  relation  to  the  enter- 
prise is  that  of  a  fixed  "  overhead  charge  "  on  its  op- 
erations. Such  is  the  case  even  in  point  of  form  as 
regards  the  investors  in  corporate  bonds  and  pre- 
ferred stock.  The  ordinary  investor  is,  in  effect,  an 
anonymous  pensioner  on  the  enterprise;  his  relation 
to  industry  is  in  the  nature  of  a  liability,  and  his 
share  in  the  conduct  of  this  industry  is  much  like  the 
share  which  the  Old  Man  of  the  Sea  once  had  in  the 
promenades  of  Sinbad. 

No  doubt,  any  reasonably  skilful  economist  — 
any  certified  accountant  of  economic  theory  —  could 


46 

successfully  question  the  goodness  of  this  characteri- 
sation of  corporate  capital.  It  is,  in  fact,  not  such 
a  description  as  is  commonly  met  with  in  those 
theories  of  ownership  and  investment  that  trace  back 
to  the  formal  definitions  of  Ricardo  and  Adam 
Smith.  Nor  is  this  description  of  latterday  facts 
here  set  down  as  a  formal  definition  of  corporate 
capital  and  its  uses ;  nor  is  it  designed  to  fit  into  that 
traditional  scheme  of  conceptions  that  still  holds  the 
attention  of  the  certified  economists.  Its  aim  is  the 
less  ambitious  one  of  describing,  in  a  loose  and  in- 
formal way,  what  is  the  nature  and  uses  of  this 
corporate  capital  and  its  ownership,  in  the  appre- 
hension of  the  common  man  out  of  doors.  He  is 
not  so  familiar  with  the  recondite  wisdom  of  the 
past,  or  with  subtle  definitions,  other  than  the  latter- 
day  subtleties  of  the  market,  the  crop  season,  the 
blast-furnace  and  refinery,  the  internal-combustion 
engine,  and  such  like  hard  and  fast  matters  with 
which  he  is  required  to  get  along  from  day  to  day. 
The  purpose  here  is  only  to  bring  out,  without  un- 
due precision,  what  these  interesting  phenonema  of 
capital,  investment,  fixed  charges,  and  the  like,  may 
be  expected  to  foot  up  to  in  terms  of  tangible  per- 
formance, in  the  unschooled  reflections  of  the  com- 
mon man,  who  always  comes  in  as  "  the  party  of  the 
second  part  "  in  all  these  manoeuvres  of  corporation 
finance.  He  commonly  has  no  more  than  a  slender 
and  sliding  grasp  of  those  honorable  principles  of 
certified  make-believe  that  distinguish  the  modern 
point  of  view  in  all  that  relates  to  property  and  its 
uses;  but  he  has  had  the  benefit  of  some  exacting 
experience  in  the  ways  of  the  new  order  and  its 


INDUSTRIAL  ARTS  47 

standards  of  reckoning.  By  consequence  of  much 
untempered  experience  the  common  man  is  begin- 
ning to  see  these  things  in  the  glaring  though  fitful 
light  of  that  mechanistic  conception  that  rates  men 
and  things  on  grounds  of  tangible  performance, — 
without  much  afterthought.  As  seen  in  this  light, 
and  without  much  afterthought,  very  much  of  the 
established  system  of  obligations,  earnings,  per- 
quisites and  emoluments,  appears  to  rest  on  a  net- 
work of  make-believe. 

Now,  it  may  be  deplorable,  perhaps  inexcusable, 
that  the  New  Order  in  industry  should  engender 
habits  of  thought  of  this  unprofitable  kind;  but  then, 
after  all,  regrets  and  excuses  do  not  make  the  out- 
come, and  with  sufficient  reason  attention  today 
centers  on  the  outcome. 

To  the  common  man  who  has  taken  to  reckoning 
in  terms  of  tangible  performance,  in  terms  of  man 
power  and  material  resources,  these  returns  on  in- 
vestment that  rest  on  productive  enterprise  as  an 
overhead  charge  are  beginning  to  look  like  unearned 
income.  Indeed,  the  same  unsympathetic  precon- 
ception has  lately  come  in  for  a  degree  of  official 
recognition.  High  officials  who  are  presumed  to 
speak  with  authority,  discretion  and  an  unbiassed 
mind  have  lately  spoken  of  incomes  from  invest- 
ments as  u  unearned  incomes,"  and  have  even  en- 
tertained a  project  for  subjecting  such  incomes  to  a 
differential  rate  of  taxation  above  what  should  fairly 
be  imposed  on  "  earned  incomes."  All  this  may,  of 
course,  be  nothing  more  than  an  unseasonable  lapse 
of  circumspection  on  the  part  of  the  officials,  who 


48  THE  VESTED  INTERESTS 

have  otherwise,  on  the  whole,  consistently  lived  up 
to  the  best  traditions  of  commercial  sagacity;  and  a 
safe  and  sane  legislature  has  also  canvassed  the  mat- 
ter and  solemnly  disallowed  any  such  invidious  dis- 
tinction between  earned  and  unearned  incomes. 
Still,  this  passing  recognition  of  unearned  incomes 
is  scarcely  less  significant  for  being  unguarded;  and 
the  occurrence  lends  a  certain  timeliness  to  any  in- 
quiry into  the  source  and  nature  of  that  net  pro- 
duct of  industry  out  of  which  any  fixed  overhead 
charges  of  this  kind  are  drawn. 

To  come  to  an  understanding  of  the  source  and 
origin  of  this  margin  of  disposable  revenue  that  goes 
to  the  earnings  of  corporate  capital,  it  is  necessary 
to  come  to  an  understanding  of  the  industrial  system 
out  of  which  the  disposable  margin  of  revenue 
arises.  Productive  industry  yields  a  margin  of  net 
product  over  cost,  counting  cost  in  terms  of  man 
power  and  material  resources;  and  under  the  es- 
tablished rule  of  self-help  and  free  bargaining  as  it 
works  out  in  corporation  finance,  this  margin  of  net 
product  has  come  to  rest  upon  productive  industry 
as  an  overhead  charge  payable  to  anonymous  out- 
siders who  own  the  corporation  securities. 

There  need  be  no  question  of  the  equity  of  this  ar- 
rangement, as  between  the  men  at  work  in  the  in- 
dustries and  the  beneficiaries  to  whom  the  overhead 
charge  is  payable.  At  least  there  is  no  intention 
here  to  question  the  equity  of  it,  or  to  defend  the 
arrangement  against  any  question  that  may  be 
brought.  It  is  also  to  be  remarked  that  the  whole 
arrangement  has  this  appearance  of  gratuitous  hand- 


INDUSTRIAL  ARTS  49 

leap  and  hardship  only  when  it  is  looked  at  from 
the  crude  ground  level  of  tangible  performance. 
When  seen  in  the  dry  light  of  the  old  and  honest 
principles  of  self-help  and  equal  opportunity,  as  un- 
derstood by  the  substantial  and  well-meaning  citi- 
zens, it  all  casts  no  shadow  of  iniquity  or  inexpedi- 
ency. 

So,  without  prejudice  to  .any  ulterior  question 
which  may  be  harbored  by  one  and  another,  the 
question  which  is  here  had  in  mind  is  quite  simply 
as  to  the  production  of  this  disposable  margin  of 
net  product  over  human  cost.  And  to  pass  muster 
today,  any  attempted  answer  will  be  required  to  meet 
that  exacting  and  often  inconvenient  insistence  on 
palpable  fact  which  is  of  the  essence  of  the  new 
order  of  knowledge  and  belief.  It  is  necessary  to 
reach  an  understanding  of  these  things  in  terms  of 
tangible  performance,  in  such  terms  as  are  germane 
to  that  new  order  of  knowledge  and  belief  out  of 
which  the  perplexity  arises,  rather  than  in  those 
terms  of  equitable  imputation  that  lie  at  the  root  of 
the  certified  economic  doctrines  and  of  corporation 
finance. 

These  relevant  facts  are  neither  particularly  ob- 
scure nor  particularly  elusive;  only,  they  have  had 
little  attention  in  the  argument  of  economists  and 
politicians.  Still  less  in  the  speculations  of  the  cap- 
tains of  finance.  The  partition  of  incomes  has  al- 
ways been  more  easily  understood  by  these  practi- 
cally-minded persons,  and  it  is  also  a  more  engross- 
ing subject  of  argumentation  than  the  production  of 
goods.  This  would  be  particularly  true  for  these 


50  THE  VESTED  INTERESTS 

economists  and  politicians,  who  are  imbued  with 
that  legalistic  spirit  which  pervades  the  modern 
point  of  view  and  all  its  votaries. 

But  it  is  known  to  all,  even  to  the  most  safely 
guarded  persons  who  do  not  come  in  contact  with 
industry  or  production,  or  even  with  the  products 
of  the  staple  industries,  that  industry  at  large  will 
always  turn  out  something  in  the  way  of  a  net 
margin  of  product  over  human  cost, —  over  human 
effort  and  necessary  consumption.  It  holds  true  as 
far  back  as  the  records  have  anything  to  say.  It 
is  evidently  a  question  of  the  productivity  of  the  in- 
dustrial arts.  Men  at  work  turn  out  a  net  product 
because  they  know  how  and  are  interested  in  doing 
it;  and  their  output  is  limited  by  the  industrial  meth- 
ods which  they  have  the  use  of.  But  the  output  is 
limited  in  such  a  way  that  it  always  exceeds  the  cost 
by  more  or  less,  barring  accident.  By  and  large, 
throughout  past  time  the  industrial  arts  have  been 
gaining  in  efficiency,  and  the  ordinary  margin  of  net 
product  over  cost  has  consequently  gone  on  widen- 
ing. This  is  much  of  the  meaning  of  "  an  advance 
in  the  industrial  arts." 

In  an  earlier  time,  by  law  and  custom,  the  net 
margin  of  product  habitually  went  to  a  master  class, 
so-called,  as  the  "  earnings  "  or  the  due  emoluments 
of  their  mastery  over  those  industrious  classes  who 
carried  forward  and  gave  effect  to  the  state  of  the 
industrial  arts  as  known  in  their  time.  By  virtue  of 
their  mastery  and  its  incorporation  in  the  institu- 
tions of  the  time,  they  had  an  equitable,  and  effect- 
ual, vested  interest  in  the  net  product  of  the  com- 
munity's industry;  and  by  virtue  of  the  same  settled 


INDUSTRIAL  ARTS  51 

principles  of  law  and  custom  it  was  for  them  to  see 
to  the  due  consumption  of  any  such  net  product 
above  cost.  In  later  times,  and  particularly  in  mod- 
ern times  and  in  the  civilised  countries,  those  im- 
memorial principles  of  privilege  equitably  vested  in 
the  master  class  have  fallen  into  discredit  as  being 
not  sufficiently  grounded  in  fact;  so  that  mastery 
and  servitude  are  disallowed  and  have  disappeared 
from  the  range  of  legitimate  institutions.  The  en- 
lightened principles  of  self-help  and  personal  equal- 
ity do  not  tolerate  these  things.  However,  they  do 
tolerate  free  income  from  investments.  Indeed,  the 
most  consistent  and  most  reputable  votaries  of  the 
modern  point  of  view  commonly  subsist  on  such  in- 
come. 

Ever  since  these  enlightened  principles  of  the 
modern  point  of  view  were  first  installed  in  the 
eighteenth  century  as  the  self-evident  rule  of  reason 
in  civilised  life,  the  industrial  arts  have  also  con- 
tinued to  gain  in  productive  efficiency,  at  an  ever- 
accelerated  rate  of  gain;  so  that  today  the  industrial 
methods  of  the  machine  era  are  highly  productive, 
beyond  any  earlier  state  of  the  industrial  arts  or 
anything  that  is  known  outside  the  range  of  this 
new  order  of  industry.  The  output  of  this  indus- 
trial system  yields  a  wider  margin  of  net  product 
over  cost  than  has  ever  been  obtainable  by  any  other 
or  earlier  known  method  of  work.  It  consequently 
affords  ground  for  an  uncommonly  substantial 
vested  interest  in  this  disposable  net  margin. 

But  the  industrial  system  of  the  new  order  will 
work  at  the  high  rate  of  efficiency  of  which  it  is  ca- 
pable, only  under  suitable  conditions.  It  is  a  com- 


52  THE  VESTED  INTERESTS 

prehensive  system  of  interdependent  working  parts, 
organised  on  a  large  scale  and  with  an  exacting  ar- 
ticulation of  parts, —  works,  mills,  railways,  ship- 
ping, groups  and  lines  of  industrial  establishments, 
all  working  together  on  a  somewhat  delicately  bal- 
anced plan  of  mutual  give  and  take.  No  one  mem- 
ber or  section  of  this  system  is  a  self-sufficient  indus- 
trial enterprise,  even  if  it  is  true  that  no  one  member 
is  strictly  dependent  on  any  other  one.  Indeed,  no 
one  member  or  section,  group  or  line  of  industrial 
establishments,  in  this  industrial  universe  of  the  new 
order,  is  a  productive  factor  at  all,  except  as  it  fits 
into  and  duly  gives  and  takes  its  share  in  the  work 
of  the  system  as  a  whole.  Such  exceptions  to  this 
rule  of  interlocking  processes  as  may  appear  on  first 
examination,  are  likely  to  prove  exceptions  in  ap- 
pearance only.  They  are  chiefly  the  backward 
trades  and  occupations  which  have  not  had  the 
benefit  of  the  Industrial  Revolution  and  do  not  be- 
long under  the  new,  mechanistic  order  of  industry; 
or  they  are  trades,  occupations  and  works  devoted 
to  the  consumption  of  goods  or  to  the  maintenance 
of  the  rules  governing  the  distribution  and  consump- 
tion of  wealth,  as,  for  instance,  banking,  menial 
service,  police  service  and  the  apparatus  of  the  law, 
the  learned  professions  and  the  fine  arts. 

It  is  also  of  the  essence  of  this  industrial  system 
and  its  technology  that  it  necessarily  involves  the  in- 
dustrial community  as  a  whole,  its  working  popula- 
tion and  its  material  resources;  and  the  measure  of 
its  successful  operation  is  determined  by  the  effectual 
team-work  of  its  constituent  parts.  And  the  indus- 
trial system  of  the  new  order  is  drawn  on  a  large 


INDUSTRIAL  ARTS  53 

scale  and  rests  on  a  comprehensive  specialisation  of 
processes  and  standardisation  of  output;  so  that  the 
"  community  "  which  is  required  for  the  necessary 
team-work  is  necessarily  a  large  community;  larger 
than  the  total  population  and  resources  that  would 
have  served  the  like  purpose  under  any  earlier  state 
of  the  industrial  arts,  at  the  same  time  that  the 
needed  coordination  of  processes  is  also  wider  and 
more  delicately  balanced  than  ever  before.  Indeed, 
the  "  industrial  community  "  of  the  new  order  is  al- 
ways and  necessarily  larger  than  any  existing  na- 
tional unit.  The  ramification  of  give  and  take  under 
the  new  industrial  system  invariably  overlaps  the 
national  frontiers,  among  all  those  peoples  who  oc- 
cupy what  would  be  called  an  "  advanced  "  place  in 
industry.  The  system,  and  therefore  the  industrial 
community  engaged  in  team-work  under  this  system, 
is  drawn  on  cosmopolitan  or  international  lines,  both 
in  respect  of  the  body  of  technological  knowledge 
which  is  turned  to  account  and  in  respect  of  the 
range  and  volume  of  materials  necessary  to  be  used 
according  to  this  new  order  in  productive  industry. 
Evidently  the  total  output  of  product  turned  out 
under  this  industrial  system,  the  "  annual  produc- 
tion," to  use  Adam  Smith's  phrase,  or  the  "  annual 
dividend,"  to  use  a  phrase  taken  from  later 
usage, —  this  total  output  is  the  output  of  the  total 
community  working  together  as  a  balanced  organisa- 
tion of  industrial  forces  engaged  in  a  moving  equi- 
librium of  production.  No  part  or  fraction  of  the 
community  is  a  productive  factor  in  its  own  right 
and  taken  by  itself,  since  no  work  can  be  done  by 
any  segment  of  the  community  in  isolation  from  the 


54  THE  VESTED  INTERESTS 

rest;  no  one  plant  or  works  would  be  a  producer  in 
the  absence  of  all  the  rest.  The  total  product  is  the 
product  of  the  total  community's  work;  or  rather  it 
is  the  product  of  the  work  of  that  fraction  of  the 
people  who  are  employed  in  productive  work, — - 
which  is  not  quite  the  same  thing,  since  there  is 
much  work  spent  on  the  consumption  of  goods,  and 
on  ways  and  means  for  such  consumption,  as  well  as 
on  their  production. 

Indeed,  it  is  by  no  means  certain  that  there  is  not 
more  time,  strain  and  ingenuity  spent  on  the  con- 
sumption of  goods  than  on  their  production.  Apart 
from  sports,  menial  service,  fashionable  dress  and 
equipage,  pet  animals  and  mandatory  social 
amenities,  there  would  also  have  to  be  included  un- 
der the  ways  and  means  of  consumption  virtually 
all  that  goes  into  salesmanship  and  advertising. 
Virtually  all  of  these  things  have  to  do  with  the 
organised  consumption  of  goods;  and  virtually  all 
are  therefore  to  be  written  off  as  waste  motion,  so 
far  as  regards  their  effect  on  the  net  productive  ef- 
ficiency of  the  industrial  community,  or  of  the  in- 
dustrial system  whose  tissues  are  consumed  in  en- 
terprise of  that  kind.  The  amount  which  is  to  be 
written  off  as  consumptive  waste  in  this  way  is  ap- 
proximately the  same  as  the  net  margin  of  product 
over  cost;  and  according  to  the  enlightened  prin- 
ciples of  self-help  and  equal  opportunity,  as  these 
principles  work  out  under  the  new  order  of  industry, 
it  is  for  the  investors  to  take  care  of  this  consump- 
tive waste  and  to  see  that  no  unconsumed  residue  is 
left  over  to  cumber  the  market  and  produce  a  glut. 


INDUSTRIAL  ARTS  55 

Evidently,  too,  the  amount  of  the  annual  produc- 
tion depends  on  the  state  of  the  industrial  arts  which 
the  working  population  has  the  use  of  for  the  time 
being;  which  is  in  the  main  a  matter  of  technological 
knowledge  and  popular  education.  So  that  the 
question  of  productivity  and  net  productivity  may  be 
stated  in  general  terms  to  the  following  effect :  The 
possible  or  potential  productive  capacity  of  any 
given  community,  having  the  disposal  of  a  given 
complement  of  man  power  and  material  resources, 
is  a  matter  of  the  state  of  the  industrial  arts,  the 
technological  knowledge,  which  the  community  has 
the  use  of;  this  sets  the  limit,  determines  the 
"  maximum  "  production  of  which  the  community  is 
capable.  The  actual  production  in  such  a  commun- 
ity will  then  be  determined  by  the  extent  to  which  the 
available  technological  efficiency  is  turned  to  ac- 
count; which  is  regulated  in  part  by  the  intelligence, 
or  "  education,"  of  the  working  population,  and  in 
greater  part  by  market  conditions  which  decide  how 
large  a  product  it  will  be  profitable  for  the  business 
men  to  turn  out.  The  net  product  is  the  amount  by 
which  this  actual  production  exceeds  its  own  cost, 
as  counted  in  terms  of  subsistence,  and  including  the 
cost  of  the  necessary  mechanical  equipment;  this 
net  product  will  then  approximately  coincide  with 
the  annual  keep,  the  cost  of  maintenance  and  re- 
placement, of  the  investors  or  owners  of  capitalised 
property  who  are  not  engaged  in  productive  indus- 
try; and  who  are  on  this  account  sometimes  spoken 
of  as  the  "  kept  classes."  Indeed,  it  would  seem 
that  the  number  and  average  cost  per  capita  of  the 


56  THE  VESTED  INTERESTS 

kept  classes,  communlbus  annis,  affords  something 
of  a  rough  measure  of  the  net  product  habitually 
derived  from  the  community's  annual  production. 

The  state  of  the  industrial  arts,  therefore,  is  the 
indispensable  conditioning  circumstance  which  de- 
termines the  productive  capacity  of  any  given  com- 
munity; and  this  is  true  in  a  peculiar  degree  under 
this  new  order  of  industry,  in  which  the  industrial 
arts  have  reached  an  unexampled  development. 
The  same  decisive  factor  may  also  be  described  as 
"  the  community's  joint  stock  of  technological 
knowledge."  This  common  stock  of  technological 
knowledge  decides  what  will  be  the  ordinary  ways 
and  means  of  industry,  and  so  it  decides  what  will 
be  the  character  and  volume  of  the  output  of  product 
which  a  given  man  power  is  capable  of  turning  out. 
Evidently  no  man  power  and  no  working  population 
can  turn  out  any  annual  product  without  the  use  of 
something  in  the  way  of  technological  knowledge, 
that  is  to  say  some  state  of  the  industrial  arts.  The 
working  community  is  a  productive  factor  only  by 
virtue  of,  and  only  up  to  the  limit  set  by,  the  state 
of  the  industrial  arts  which  it  has  the  use  of.  The 
contrast  of  industrial  Japan  or  of  industrial  Ger- 
many before  the  middle  of  the  nineteenth  century 
and  after  the  close  of  the  century  will  serve  for  il- 
lustration; that  is  to  say  before  and  after  those 
peoples  had  come  in  for  the  use  of  the  technology  of 
the  machine  era.  The  disposable  excess  of  the 
yearly  product  over  cost  is  a  matter  of  the  efficiency 
of  the  available  state  of  technological  knowledge, 
and  of  the  measure  in  which  the  working  popula- 
tion is  put  in  a  position  to  make  use  of  it.  These,  of 


INDUSTRIAL  ARTS  57 

course,  are  obvious  facts,  which  it  should  scarcely  be 
necessary  to  recite,  except  that  they  are  habitually 
overlooked,  perhaps  because  they  are  obvious. 

The  Industrial  Revolution  of  the  eighteenth  cen- 
tury was  a  revolution  in  the  state  of  the  industrial 
arts,  of  course ;  it  was  a  mutation  of  character  in  the 
common  stock  of  technological  knowledge  held  and 
used  by  the  industrial  population  of  the  civilised 
countries  from  that  time  f6rward.  The  shift  from 
the  older  to  the  new  order  of  industry  was  of  such  a 
nature  as  to  call  for  the  use  of  an  extensive  equip- 
ment of  mechanical  apparatus,  progressively  more 
and  more  extensive  as  the  change  to  the  machine 
technology  went  on;  and  at  the  same  time  the  dis- 
posable margin  of  product  above  cost  also  progres- 
sively went  on  increasing  with  each  further  increase 
of  the  community's  joint  stock  of  technological 
knowledge. 

This  body  of  technological  knowledge,  the  state 
of  the  industrial  arts,  of  course  has  always  contin- 
ued to  be  held  as  a  joint  stock.  Indeed  this  joint 
stock  of  technology  is  the  substance  of  the  commun- 
ity's civilisation  on  the  industrial  side,  and  therefore 
it  constitutes  the  substantial  core  of  that  civilisation. 
Like  any  other  phase  or  element  of  the  cultural  heri- 
tage, it  is  a  joint  possession  of  the  community,  so 
far  as  concerns  its  custody,  exercise,  increase  and 
transmission;  but  it  has  turned  out,  under  the  pe- 
culiar circumstances  that  condition  the  use  of  this 
technology  among  these  civilised  peoples,  that  its 
ownership  or  usufruct  has  come  to  be  effectually 
vested  in  a  relatively  small  number  of  persons. 
Unforeseen  and  undesigned,  the  mechanical  circum- 


58  THE  VESTED  INTERESTS 

stances  of  the  new  order  in  industry  have  reversed 
the  practical  effects  of  the  common  law  in  respect 
of  self-help,  equal  opportunity  and  free  bargaining. 
The  mechanics  of  the  case  has  worked  out  this  re- 
sult by  cutting  away  the  ground  on  which  those  prin- 
ciples were  based  at  the  time  of  their  acceptance 
and  installation. 

The  machine  technology  requires  for  its  working 
a  large  and  specialised  mechanical  apparatus,  an 
ever  increasingly  large  and  increasingly  elaborate 
material  equipment.  So  also  it  requires  a  large  and 
diversified  supply  of  material  resources,  both  in  raw 
materials  and  in  the  way  of  motive  power.  It  is 
only  on  condition  that  these  requirements  are  met 
in  some  passable  fashion  that  this  industrial  system 
will  work  at  all,  and  it  is  only  as  these  requirements 
are  freely  met  that  the  machine  industry  will  work 
at  a  high  efficiency.  At  the  same  time  the  settled 
principles  of  law  and  usage  and  public  policy  handed 
down  from  the  eighteenth  century  have  in  effect  de- 
cided, and  continue  to  decide,  that  all  material 
wealth  is,  rightly,  to  be  held  in  private  ownership, 
and  is  to  be  made  use  of  only  subject  to  the  un- 
hampered discretion  of  the  legally  rightful  owner. 
Meantime  the  highly  productive  state  of  the  indus- 
trial arts  embodied  in  the  technological  knowledge 
of  the  new  order  can  be  turned  to  account  only  by 
use  of  this  material  equipment  and  these  natural 
resources  which  continue  to  be  held  in  private  owner- 
ship. From  which  it  follows  that  these  material 
means  of  industry,  and  the  state  of  the  industrial 
arts  which  these  material  means  are  to  serve,  can  be 
turned  to  productive  use  only  so  far  and  on  such 


INDUSTRIAL  ARTS  59 

conditions  as  the  rightful  owners  of  the  material 
equipment  and  resources  may  choose  to  impose; 
which  enables  the  owners  of  this  indispensable  ma- 
terial wealth,  in  effect,  to  take  over  the  use  of  these 
industrial  arts  for  their  own  sole  profit.  So  that 
the  usufruct  of  the  community's  technological  knowl- 
edge has  come  to  vest  in  the  owners  of  such  material 
wealth  as  is  held  in  sufficiently  large  blocks  for  the 
purpose. 

Therefore,  by  award  of  the  settled  principles  of 
equity  and  self-help  embodied  in  the  modern  point 
of  view,  as  stabilised  in  the  eighteenth  century,  the 
owners  of  the  community's  material  resources  — 
that  is  to  say  the  investors  in  industrial  business  — 
have  in  effect  become  "  seized  and  possessed  of  " 
the  community's  joint  stock  of  technological  knowl- 
edge and  efficiency.  Not  that  this  accumulated 
knowledge  of  industrial  forces  and  processes  has 
passed  into  the  intellectual  keeping  of  the  investors 
and  been  assimilated  into  their  mentality,  even  to  the 
extent  of  a  reasonably  scanty  modicum.  It  remains 
true,  of  course,  that  the  investors,  owners,  kept 
classes,  or  whatever  designation  is  preferred,  are 
quite  exceptionally  ignorant  of  all  that  mechanics  of 
industry  whose  usufruct  is  vested  in  them;  they  are, 
in  effect,  fully  occupied  with  other  things,  and  their 
knowledge  of  industry  ordinarily  does  not,  and  need 
not,  extend  to  any  rudiments  of  technology  or  in- 
dustrial process.  It  is  not  as  intelligent  persons,  but 
only  as  owners  of  material  ways  and  means,  as 
vested  interests,  that  they  come  into  the  case.  The 
exceptions  to  this  rule  are  only  sufficiently  numerous 
to  call  attention  to  themselves  as  exceptions. 


60  THE  VESTED  INTERESTS 

As  an  intellectual  achievement  and  as  a  working 
force  the  state  of  the  industrial  arts  continues,  of 
course,  to  be  held  jointly  in  and  by  the  community  at 
large;  but  equitable  title  to  its  usufruct  has,  in  effect, 
passed  to  the  owners  of  the  indispensable  material 
means  of  industry.  Though  not  hitherto  by  formal 
specification  and  legal  provision,  their  assets  include, 
in  effect,  the  state  of  the  industrial  arts  as  well  as 
the  mechanical  appliances  and  the  materials  without 
which  these  industrial  arts  are  of  no  effect.  It  is 
true,  a  little  something,  and  indeed  more  than  a 
little,  has  been  done  toward  the  due  legal  recogni- 
tion of  the  investor's  usufruct  of  the  community's 
technological  efficiency,  in  the  recognition  of  vested 
interests  and  intangible  assets  as  articles  of  private 
property  defensible  at  law.  But  on  the  whole,  and 
until  a  relatively  recent  date,  the  investors'  tenure  of 
this  usufruct  has  been  allowed  to  rest  informally  on 
their  control  of  the  community's  material  assets. 
Still,  the  outlook  now  appears  to  be  that  something 
further  may  presently  be  done  toward  a  more  secure 
and  unambiguous  tenure  of  this  usufruct,  by  suitable 
legal  decisions  bearing  on  the  inviolability  of  vested 
interests  and  intangible  assets.  The  outcome  is,  in 
effect,  that  these  owners  have  equitably  become  the 
sole  legitimate  beneficiaries  of  the  community's  dis- 
posable margin  of  product  above  cost. 

These  are  also  simple  facts  and  patent,  and  they 
should  seem  sufficiently  obvious  without  argument. 
They  have  also  been  explained  at  some  length  else- 
where. But  this  recital  of  what  should  already  be 
commonplace  information  seems  necessary  here  for 
the  sake  of  a  more  perspicuous  continuity  in  the 


INDUSTRIAL  ARTS  61 

present  argument.  To  many  persons,  perhaps  to 
the  greater  proportion  of  those  unpropertied  per- 
sons that  are  often  spoken  of  collectively  as  "  the 
common  man,"  the  state  of  things  which  has  just 
been  outlined  may  seem  untoward.  And  further  re- 
flection on  the  character  and  prospective  conse- 
quences of  this  arrangement  is  likely  to  add  some- 
thing more  to  the  common  man's  apprehension  of 
hardship  and  insecurity  to  come.  Therefore  it  may 
be  well  to  recall  that  this  state  of  things  has  been 
brought  to  pass  not  by  the  failure  of  those  principles 
of  equity  and  self-help  that  lie  at  the  root  of  it  all, 
but  rather  by  the  eminently  unyielding  stability  and 
sufficiency  of  these  principles  under  new  conditions. 
It  is  not  due  to  any  inherent  weakness  or  shiftiness 
in  these  principles  of  law  and  custom;  which  have 
faithfully  remained  the  same  as  ever,  and  which 
all  men  admit  were  good  and  sound  at  the  period 
of  their  installation.  But  it  is  beginning  to  appear 
now,  after  the  event,  that  the  inclusion  of  unre- 
stricted ownership  among  those  rights  and  perqui- 
sites which  were  allowed  to  stand  over  when  the 
transition  was  made  to  the  modern  point  of  view  is 
likely  to  prove  inexpedient  in  the  further  course  of 
growth  and  change. 

Unrestricted  ownership  of  property,  with  inherit- 
ance, free  contract,  and  self-help,  is  believed  to 
have  been  highly  expedient  as  well  as  eminently 
equitable  under  the  circumstances  which  conditioned 
civilised  life  at  the  period  when  the  civilised  world 
made  up  its  mind  to  that  effect.  And  the  discrep- 
ancy which  has  come  in  evidence  in  .this  later  time 
is  traceable  to  the  fact  that  other  things  have  not 


62  THE  VESTED  INTERESTS 

remained  the  same.  The  odious  outcome  has  been 
made  by  disturbing  causes,  not  by  these  enlightened 
principles  of  honest  living.  Security  and  unlimited 
discretion  in  the  rights  of  ownership  were  once 
rightly  made  much  of  as  a  simple  and  obvious  safe- 
guard of  self-direction  and  self-help  for  the  common 
man;  whereas,  in  the  event,  under  a  new  order  of 
circumstances,  it  all  promises  to  be  nothing  better 
than  a  means  of  assured  defeat  and  vexation  for 
the  common  man. 


IV 

FREE   INCOME 

INDUSTRY  of  the  modern  sort  —  mechanical,  spe- 
cialised, standardised,  drawn  on  a  large  scale  —  is 
highly  productive.  When  this  industrial  system  of 
the  new  order  is  not  hindered  by  outside  control  it 
will  yield  a  very  large  net  return  of  output  over 
cost, —  counting  cost  in  terms  of  man  power  and 
necessary  consumption;  so  large,  indeed,  that  the 
cost  of  what  is  necessarily  consumed  in  productive 
work,  in  the  way  of  materials,  mechanical  appliances, 
and  subsistence  of  the  workmen,  is  inconsiderable  by 
comparison.  The  same  thing  may  be  described  by 
saying  that  the  necessary  consumption  of  subsistence 
and  industrial  plant  amounts  to  but  an  inconsider- 
able deduction  from  the  gross  output  of  industry  at 
any  time.  So  inordinately  productive  is  this  fa- 
miliar new  order  of  industry  that  in  ordinary  times 
it  is  forever  in  danger  of  running  into  excesses  and 
turning  out  an  output  in  excess  of  what  the 
market  —  that  is  to  say  the  business  situation  —  will 
tolerate.  There  is  constant  danger  of  "  overpro- 
duction." So  that  there  is  commonly  a  large  vol- 
ume of  man  power  unemployed  and  an  appreciable 
proportion  of  the  industrial  plant  lying  idle  or  half 
idle.  It  is  quite  unusual,  perhaps  altogether  out  of 
the  question,  to  let  all  or  nearly  all  the  available 

63 


64  THE  VESTED  INTERESTS 

plant  and  man  power  run  at  full  capacity  even  for 
a  limited  time. 

It  is,  of  course,  impossible  to  say  how  large  the 
net  aggregate  product  over  cost  would  be  —  count- 
ing the  product  in  percentages  of  the  necessary 
cost  —  in  case  this  industrial  system  were  allowed 
to  work  at  full  capacity  and  with  free  use  of  all  the 
available  technological  knowledge.  There  is  no 
safe  ground  for  an  estimate,  for  such  a  thing  has 
never  been  tried,  and  no  near  approach  to  such  a 
state  of  things  is  to  be  looked  for  under  the  existing 
circumstances  of  ownership  and  control.  Even  un- 
der the  most  favorable  conditions  of  brisk  times  the 
business  situation  will  not  permit  it.  There  will 
at  least  always  be  an  indefinitely  large  allowance  to 
be  reckoned  for  work  and  substance  expended  on 
salesmanship,  advertising,  and  competitive  manage- 
ment designed  to  increase  sales.  This  line  of  ex- 
penditures is  a  necessary  part  of  businesslike  man- 
agement, although  it  contributes  nothing  to  the  out- 
put of  goods,  and  in  that  sense  it  is  to  be  counted 
as  a  necessary  deduction  from  the  net  productive 
capacity  of  the  industrial  system  as  it  runs.  It  would 
also  be  extremely  difficult  to  make  allowance  for 
this  deduction,  since  much  of  it  is  not  recognised  as 
such  by  the  men  in  charge  and  does  not  appear  on 
their  books  under  any  special  descriptive  heading. 
In  one  way  and  another,  and  for  divers  and  various 
reasons,  the  net  production  of  goods  serviceable  for 
human  use  falls  considerably  short  of  the  gross  out- 
put, and  the  gross  output  is  always  short  of  the 
productive  capacity  of  the  available  plant  and  man 
power. 


FREE  INCOME  65 

Still,  taken  as  it  goes,  with  whatever  handicap  of 
these  various  kinds  is  to  be  allowed  for,  it  remains 
patently  true  that  the  net  product  greatly  exceeds 
the  cost.  So  much  so  that  whatever  is  required  for 
the  replacement  of  the  material  equipment  consumed 
in  production,  plus  "  reasonable  returns  "  on  this 
equipment,  commonly  amounts  to  no  more  than  a 
fraction  of  the  total  output.  The  resulting  margin 
of  excess  product  over  cost  plus  reasonable  returns 
on  the  material  equipment  is  due  to  the  high  pro- 
ductive efficiency  of  the  current  state  of  the  indus- 
trial arts  and  is  the  source  of  that  free  income  which 
gives  rise  to  intangible  assets.  The  distinction  be- 
tween tangible  assets  and  intangible  is  not  a  hard 
and  fast  one,  of  course,  but  the  difference  is  suffi- 
ciently broad  and  sufficiently  well  understood  for  use 
in  the  present  connection,  so  long  as  no  pains  is 
taken  to  confuse  these  terms  with  needless  technical 
verbiage. 

To  avoid 'debate  and  digression,  it  may  be  re- 
marked that  "  reasonable  returns  "  is  also  here  used 
in  the  ordinary  sense  of  the  expression,  without  fur- 
ther definition,  as  being  sufficiently  understood  and 
precise  enough  for  the  argument.  The  play  of  mo- 
tives and  transactions  by  which  a  rough  common 
measure  of  reasonable  returns  has  been  arrived  at 
is  taken  for  granted.  A  detailed  examination  of  all 
that  matter  would  involve  an  extended  digression, 
and  nothing  would  be  gained  for  the  argument. 

According  to  the  traditional  view,  which  was 
handed  on  from  the  period  before  the  coming  of 
corporation  finance,  and  which  still  stands  over  as 
an  article  of  common  belief  in  the  certified  economic 


66  THE  VESTED  INTERESTS 

theories,  "  capital  "  represents  the  material  equip- 
ment, valued  at  its  cost,  together  with  funds  in  hand 
required  as  a  "  working  capital  "  to  provide  ma- 
terials and  a  labor  force.  On  this  view,  corpora- 
tion securities  are  taken  to  cover  ownership  of  the 
plant  and  the  needed  working  capital;  and  there  has 
been  a  slow-dying  prejudice  against  admitting  that 
anything  less  tangible  than  these  items  should  prop- 
erly be  included  in  the  corporate  capitalisation  and 
made  a  basis  on  which  to  issue  corporate  securities. 
Hence  that  stubborn  popular  prejudice  against 
*' watered  stock"  which  corporation  finance  had  to 
contend  with  all  through  the  latter  half  of  the  nine- 
teenth century.  "  Watered  stock  "  is  now  virtually 
a  forgotten  issue.  Corporation  finance  has  dis- 
posed of  the  quarrel  by  discontinuing  the  relevant 
facts. 

There  is  still  a  recognised  distinction  between 
tangible  assets  and  intangible;  but  it  has  come  to 
be  recognised  in  corporation  practice  that  the  only 
reasonable  basis  of  capitalisation  for  any  assets,  tan- 
gible or  intangible,  is  the  earning-capacity  which 
they  represent.  And  the  amount  of  capital  is  a 
question  of  capitalisation  of  the  available  assets. 
So  that,  if  the  material  equipment,  e.  g.,  is  duly  capi- 
talised on  its  earning-capacity,  any  question  as  to  its 
being  "  watered  "  is  no  longer  worth  pursuing;  since 
stock  can  be  said  to  be  "  watered  "  only  by  compari- 
son with  the  cost  of  the  assets  which  it  covers,  not  in 
relation  to  its  earning-capacity.  The  latter  point  is 
taken  care  of  by  the  stock  quotations  of  the  market. 
On  the  other  hand,  intangible  assets  neither  have 
now  nor  ever  have  had  any  other  basis  than  capitali- 


FREE  INCOME  67 

sation  of  earning  capacity,  and  any  question  of 
"  water  "  in  their  case  is  consequently  quite  idle. 
Intangible  assets  will  not  hold  water. 

Corporation  finance  is  one  of  the  outgrowths  of 
the  New  Order.  And  one  of  the  effects  wrought  by 
corporation  finance  is  a  blurring  of  the  distinction 
between  tangible  assets  and  intangible;  inasmuch  as 
both  are  now  habitually  determined  by  a  capitalisa- 
tion of  earning-capacity,  rather  than  by  their  ascer- 
tained cost,  and  it  is  difficult,  if  not  impossible,  to 
draw  a  hard  and  fast  line  between  that  part  of  a 
concern's  earning-capacity  which  is  properly  to  be  as- 
signed to  its  plant  and  that  which  is  due  to  its  con- 
trol of  the  market.  Still,  an  intelligible  distinction 
is  maintained  in  common  usage,  between  tangible  as- 
sets and  intangible,  even  if  the  distinction  is  some- 
what uncertain  in  detail;  and  such  a  distinction  is 
convenient,  so  long  as  too  sharp  a  contrast  between 
the  two  is  not  insisted  on. 

The  earning-capacity  of  the  tangible  assets  is  pre- 
sumed to  represent  the  productive  capacity  of  the 
plant,  considered  as  a  mechanical  apparatus  en- 
gaged in  an  industrial  process  for  the  production  of 
goods  or  services;  it  is  presumed  to  rest  on  the  mar- 
ket value  of  the  mechanical  output  of  the  plant. 
The  plant  is  a  productive  factor  because  and  in  so 
far  as  it  turns  to  practical  account  the  state  of  the 
industrial  arts  now  in  use, —  the  community's  joint 
stock  of  technological  knowledge.  So  soon,  or  so 
far,  as  the  plant  and  its  management  falls  short  of 
meeting  the  ordinary  requirements  of  this  current 
state  of  the  industrial  arts,  and  fails  to  make  use  of 
such  technological  knowledge  as  is  commonly  em- 


68  THE  VESTED  INTERESTS 

ployed,  the  whole  works  ceases  by  that  much  to  be 
a  productive  factor.  The  productive  efficiency, 
and  the  productive  value,  of  any  given  item  of 
industrial  equipment  is  measured  by  its  effective 
use  of  the  technological  knowledge  current  in  the 
community  for  the  time  being.  So  also,  the  produc- 
tive value  of  any  given  body  of  natural  resources  — 
land,  raw  materials,  motive  power  —  is  strictly  de- 
pendent on  the  degree  in  which  it  fits  into  the  indus- 
trial system  as  it  runs. 

This  dependence  of  productive  value  on  conform- 
ity to  and  use  of  the  state  of  the  industrial  arts  is 
constantly  shown  in  the  case  of  land  and  similar  nat- 
ural resources,  by  the  fluctuation  of  rental  values. 
Land  and  other  resources  will  be  more  valuable  the 
more  suitable  they  are  for  present  and  prospective 
use.  The  like  is  true  for  the  mechanical  equipment, 
perhaps  in  a  more  pronounced  degree.  Industrial 
plant,  e.  g.,  is  always  liable  to  depreciation  by  obso- 
lescence in  case  the  state  of  the  industrial  arts 
changes  in  such  a  way  that  the  method  of  work  em- 
bodied in  the  particular  article  of  equipment  is  dis- 
placed by  new  and  more  suitable  methods,  more  suit- 
able under  the  altered  circumstances.  In  such  a 
case,  which  is  of  very  frequent  occurrence  under  the 
new  order  of  industry,  any  given  plant,  machine,  or 
similar  contrivance  may  lose  all  its  value  as  a  means 
of  production.  And  so  also,  on  the  other  hand,  a 
given  plant,  as,  for  instance,  a  given  railway  system 
or  dock,  may  acquire  additional  productive  value 
through  changes  in  the  industrial  system  which  make 
it  more  suitable  for  present  use. 

Evidently  the  chief,  or  at  least  the  indispensable, 


FREE  INCOME  69 

element  of  productive  efficiency  in  any  item  of  indus- 
trial equipment  or  resources  is  the  use  which  it  makes 
of  the  available  technological  knowledge;  and  evi- 
dently, too,  its  earning-capacity  as  a  productive  fac- 
tor depends  strictly  on  the  same  fact, —  the  usufruct 
of  the  state  of  the  industrial  arts.  And  all  the 
while  the  state  of  the  industrial  arts,  which  the  in- 
dustrial equipment  so  turns  to  account  for  the  bene- 
fit of  its  owner,  continues  to  be  a  joint  stock  of  in- 
dustrial knowledge  and  proficiency  accumulated, 
held,  exercised,  increased  and  transmitted  by  the 
community  at  large;  and  all  the  while  the  owner  of 
the  equipment  is  some  person  who  has  contributed 
no  more  than  his  per-capita  quota  to  this  state  of  the 
industrial  arts  out  of  which  his  earnings  arise.  In- 
deed the  chances  are  that  the  owner  has  contributed 
less  than  his  per-capita  quota,  if  anything,  to  that 
common  fund  of  knowledge  on  the  product  of  which 
he  draws  by  virtue  of  his  ownership,  because  he  is 
likely  to  be  fully  occupied  with  other  things, —  such 
things  as  lucrative  business  transactions,  e.  g.,  or  the 
decent  consumption  of  superfluities. 

And  at  this  point  the  difference  Between  tangible 
assets  and  intangible  comes  in  sight,  or  at  least  the 
ground  of  the  habitual  distinction  between  the  two. 
Tangible  assets,  it  appears,  are  such  assets  as  repre- 
sent the  earning-capacity  of  any  mechanically  pro- 
ductive property;  whereas  intangible  assets  represent 
assured  income  which  can  not  be  assigned  to  any  spe- 
cific material  factor  as  its  productive  source.  In- 
tangible assets  are  the  capitalised  value  of  income 
not  otherwise  accounted  for.  Such  income  arises 
out  of  business  relations  rather  than  out  of  industry; 


7o  THE  VESTED  INTERESTS 

it  is  derived  from  advantages  of  salesmanship,  ra- 
ther than  from  productive  work;  it  represents  no 
contribution  to  the  output  of  goods  and  services,  but 
only  an  effectual  claim  to  a  share  in  the  "  annual  div- 
idend,"—  on  grounds  which  appear  to  be  legally 
honest,  but  which  can  not  be  stated  in  terms  of  me- 
chanical cause  and  effect,  or  of  productive  efficiency, 
or  indeed  in  any  terms  that  involve  notions  of 
physical  dimensions  or  of  mechanical  action. 

When  the  theoreticians  explain  and  justify  these 
returns  that  go  to  adroit  salesmanship,  or  "  mana- 
gerial ability,"  as  it  is  also  called,  it  invariably  turns 
but  that  the  grounds  assigned  for  it  are  of  the  na- 
ture of  figures  of  speech  —  metaphor  or  analogy. 
Not  that  these  standard  theoretical  explanations  are 
to  be  set  aside  as  faulty,  inadequate  or  incomplete; 
their  great  volume  and  sincerity  forbids  that.  It  is 
rather  that  they  are  to  be  accepted  as  a  faithful  ac- 
count of  an  insubstantial  fact  in  insubstantial  terms. 
And  they  are  probably  as  good  an  account  of  the 
equitable  distribution  of  free  income  as  the  princi- 
ples of  the  modern  point  of  view  will  tolerate. 

But  while  intangible  assets  represent  income 
which  accrues  out  of  certain  immaterial  relations  be- 
tween their  owners  and  the  industrial  system,  and 
while  this  income  is  accordingly  not  a  return  for  me- 
chanically productive  work  done,  it  still  remains  true, 
of  course,  that  such  income  is  drawn  from  the  annual 
product  of  industry,  and  that  its  productive  source 
is  therefore  the  same  as  that  of  the  returns  on  tan- 
gible assets.  The  material  source  of  both  is  the 
same;  and  it  is  only  that  the  basis  on  which -the  in- 
come is  claimed  is  not  the  same  for  both.  It  is  not 


FREE  INCOME  71 

a  difference  in  respect  of  the  ways  and  means  by 
which  they  are  created,  but  only  in  respect  of  the 
ways  and  means  by  which  these  two  classes  of  income 
are  intercepted  and  secured  by  the  beneficiaries  to 
whom  they  accrue.  The  returns  on  tangible  assets 
are  assumed  to  be  a  return  for  the  productive  use  of 
the  plant;  returns  on  intangible  assets  are  a  return 
for  the  exercise  of  certain  immaterial  relations  in- 
volved in  the  ownership  and  control  of  industry  and 
trade. 

Best  known  by  name  among  intangible  assets  is 
the  ancient  rubric  of  "  good-will,"  technically  so 
called;  which  has  stood  over  from  before  the  coming 
of  the  new  order  in  business  enterprise.  This  has 
long  been  considered  the  original  type-form  of  intan- 
gible assets  as  a  class.  By  ancient  usage  the  term 
denotes  a  customary  preferential  advantage  in  trade; 
it  is  not  designed  to  describe  a  body  of  benevolent 
sentiments.  Good-will  has  long  been  known,  dis- 
cussed and  allowed  for  as  a  legitimate,  ordinary  and 
valuable  immaterial  possession  of  men  engaged  in 
mercantile  enterprise  of  all  kinds.  It  has  been  held 
to  be  a  product  of  exemplary  courtesy  and  fair  deal- 
ing with  customers,  due  to  turning  out  goods  or 
services  of  an  invariably  sound  quality  and  honest 
measure,  and  indeed  due  to  the  conspicuous  practice 
of  the  ordinary  Christian  virtues,  but  chiefly  to  com- 
mon honesty.  Similarly  valuable,  and  of  a  similarly 
immaterial  nature,  is  the  possession  of  a  trade-secret, 
a  trade-mark,  a  patent-right,  a  franchise,  any  statu- 
tory monopoly,  or  a  monopoly  secured  by  effectually 
cornering  the  supply  or  the  market  for  any  given 


72  THE  VESTED  INTERESTS 

line  of  goods  or  services.  From  any  one  of  these 
a  profitable  advantage  may  be  derived,  and  they 
have  therefore  a  market  value.  They  afford  their 
possessor  a  preferential  gain,  as  against  his  compet- 
itors or  as  against  the  general  body  of  customers 
which  the  state  of  the  industrial  arts  and  the  organi- 
sation of  business  throws  in  his  way.  After  the  an- 
alogy of  good-will,  it  has  been  usual  to  trace  any 
such  special  run  of  free  income  to  the  profitable  use 
of  a  special  advantage  in  the  market,  which  is  then 
appraised  as  a  valuable  means  of  gain  and  comes  to 
figure  as  an  asset  of  its  possessor.  But  all  this  goes 
to  explain  how  these  benefits  go  to  these  beneficiar- 
ies; it  does  not  account  for  the  fact  that  there  is  pro- 
duced a  net  output  of  product  available  for  free  dis- 
tribution to  these  persons. 

These  supernumerary  and  preferential  gains,  "  ex- 
cess profits,"  or  whatever  words  may  best  describe 
this  class  of  free  income,  may  be  well  deserved  by 
these  beneficiaries,  or  they  may  not.  The  income  in 
question  is,  in  any  case,  not  created  by  the  good  de- 
serts of  the  beneficiaries,  however  meritorious  their 
conduct  may  be.  Honesty  may  conceivably  be  the 
best  policy  in  mercantile  pursuits,  and  it  may  also 
greatly  serve  the  convenience  of  any  community  in 
which  an  honest  merchant  is  found;  yet  honest  deal- 
ing, strictly  speaking,  is  an  agency  of  conservation 
rather  than  of  creation.  A  trade-secret  may  also 
be  profitable  to  the  concern  which  has  the  use  of  it, 
and  the  special  process  which  it  covers  may  be  es- 
pecially productive;  but  the  same  article  of  techno- 
logical knowledge  would  doubtless  contribute  more 
to  the  total  productivity  of  industry  if  it  were  shared 


FREE  INCOME  73 

freely  by  the  industrial  community  at  large.  Such 
technological  knowledge  is  an  agency  of  production, 
but  it  is  the  monopoly  of  it  that  is  profitable  to  its 
possessor  as  a  special  source  of  gain.  The  like  ap- 
plies to  patent-rights,  of  course.  Whereas  monop- 
olies of  the  usual  kind,  which  control  any  given  line 
of  industry  by  charter,  conspiracy,  or  combination 
of  ownership,  derive  their  special  gains  from  their 
ability  to  restrain  trade,  limit  the  output  of  goods  or 
services,  and  so  "  maintain  prices." 

Intangible  assets  of  this  familiar  kind  are  very 
common  among  the  business  concerns  of  the  new 
order,  particularly  among  the  larger  and  more  pros- 
perous of  them,  and  they  afford  a  rough  measure  of 
the  ability  of  these  concerns  profitably  to  restrict 
production.  The  very  large  aggregate  value  of 
such  assets  indicates  how  imperative  it  is  for  the  con- 
duct of  industrial  business  under  the  new  order  to 
restrict  output  within  reasonable  limits,  and  at  the 
same  time  how  profitable  it  is  to  be  able  to  prevent 
the  excessively  high  productive  capacity  of  modern 
industry  from  outrunning  the  needs  of  profitable  bus- 
iness. For  the  prosperity  of  business  it  is  necessary 
to  keep  the  output  within  reasonable  limits ;  that  is  to 
say,  within  such  limits  as  will  serve  to  maintain  rea- 
sonably profitable  prices;  that  is  to  say,  such  prices 
as  will  yield  the  largest  obtainable  net  return  to  the 
concerns  engaged  in  the  business.  In  this  connec- 
tion, and  under  the  existing  conditions  of  investment 
and  credit,  "  reasonable  returns  "  means  the  same 
thing  as  "  the  largest  practicable  net  returns."  It 
all  foots  up  to  an  application  of  the  familiar  princi- 
ple of  "  charging  what  the  traffic  will  bear  ";  for  in 


74  THE  VESTED  INTERESTS 

the  matter  of  profitable  business  there  is  no  reasona- 
ble limit  short  of  the  maximum.  In  business,  the 
best  price  is  always  good  enough;  but,  so  also,  noth- 
ing short  of  the  best  price  is  good  enough.  Buy 
cheap  and  sell  dear. 

Intangibles  of  this  kind,  which  represent  a  "  con- 
scientious withdrawal  of  efficiency,"  an  effectual  con- 
trol of  the  rate  or  volume  of  output,  are  altogether 
the  most  common  of  immaterial  assets,  and  they 
make  up  altogether  the  largest  class  of  intangibles 
and  the  most  considerable  body  of  immaterial  wealth 
owned.  Land  values  are  of  much  the  same  nature 
as  these  corporate  assets  which  represent  capitalised 
restriction  of  output,  in  that  the  land  values,  too,  rest 
mostly  on  the  owner's  ability  to  withhold  his  prop- 
erty from  productive  use,  and  so  to  drive  a  profitable 
bargain.  Rent  is  also  a  case  of  charging  what  the 
traffic  will  bear;  and  rental  values  should  properly 
be  classed  with  these  intangible  assets  of  the  larger 
corporations,  which  are  due  to  their  effectual  control 
of  the  rate  and  volume  of  production.  And  apart 
from  the  rental  values  of  land,  which  are  also  in  the 
nature  of  monopoly  values,  it  is  doubtful  if  the  total 
material  wealth  in  any  of  the  civilised  countries  will 
nearly  equal  the  total  amount  of  this  immaterial 
wealth  that  is  owned  by  the  country's  business  men 
and  the  investors  for  whom  they  do  business. 
Which  evidently  comes  to  much  the  same  as  saying 
that  something  more  than  one-half  of  the  net  prod- 
uct of  the  country's  industry  goes  to  those  persons 
in  whom  the  existing  state  of  law  and  custom  vests 
a  plenary  power  to  hinder  production. 

It  is  doubtful  if  the  total  of  this  immaterial  wealth 


FREE  INCOME  75 

exceeds  the  total  material  wealth  in  the  advanced 
industrial  countries;  although  it  is  at  least  highly 
probable  that  such  is  the  case,  particularly  in  the 
richer  and  more  enlightened  of  these  countries;  as, 
e.  g.,  in  America  or  the  United  Kingdom,  where  the 
principles  of  self-help  and  free  bargain  have  con- 
sistently had  the  benefit  of  a  liberal  —  that  is  a 
broad  —  construction  and  an  unbending  applica- 
tion. The  evidence  in  the  case  is  not  to  be  had 
in  such  unambiguous  shape  as  to  carry  conviction, 
for  the  distinction  between  tangible  assets  and  intan- 
gible is  not  consistently  maintained  or  made  a  mat- 
ter of  record.  So,  e.  g.,  it  is  not  unusual  to  find  that 
corporation  bonds  —  railroad  or  industrial  —  which 
secure  their  owner  a  free  income  and  are  carried  as 
an  overhead  charge  by  the  corporation,  are  at  the 
same  time  a  lien  on  the  corporation's  real  property; 
which  in  turn  is  likely  to  be  of  less  value  than  the 
corporation's  total  liabilities.  Evidently  the  case  is 
sufficiently  confusing,  considered  as  a  problem  in  the 
economic  theory  of  capital,  but  it  offers  no  particular 
difficulty  when  considered  as  a  proposition  in  corpor- 
ation finance. 

There  is  another  curious  question  that  will  also 
have  to  be  left  as  a  moot  question,  in  the  absence  of 
more  specific  information  than  that  which  is  yet  avail- 
able; more  a  question  of  idle  curiosity,  perhaps,  than 
of  substantial  consequence.  How  nearly  is  it  likely 
that  the  total  gains  which  accrue  to  these  prosperous 
business  concerns  and  their  investors  from  their  con- 
scientious withdrawal  of  efficiency  will  equal  the  to- 
tal loss  suffered  by  the  community  as  a  whole  from 
the  incidental  reduction  of  the  output?  Net  pro- 


76  THE  VESTED  INTERESTS 

duction  is  kept  down  in  order  to  get  a  profitable 
price  for  the  output;  but  it  is  not  certain  whether  the 
net  production  has  to  be  lowered  by  as  much  or  more 
than  the  resulting  increased  gain  which  this  business- 
like strategy  brings  to  the  businesslike  strategists. 
The  strategic  curtailment  of  net  production  below 
productive  capacity  is  net  loss  to  the  community  as  a 
whole,  including  both  the  business  men  and  their 
customers;  the  gains  which  go  to  these  business  con- 
cerns in  this  way  are  net  loss  to  the  community  as  a 
whole,  exclusive  of  the  business  concerns  and  their 
investors.  The  resulting  question  is,  therefore,  not 
whether  the  rest  of  the  community  loses  as  much  as 
the  business  men  gain, —  that  goes  without  saying, 
since  the  gains  of  the  business  men  in  the  case  are 
paid  over  to  them  by  the  rest  of  the  community  in 
the  enhanced  (or  maintained)  price  of  the  prod- 
ucts; but  rather  it  is  a  question  whether  the  rest  of 
the  community,  the  common  man,  loses  twice  as  much 
as  the  business  concerns  and  their  investors  gain. 

The  whole  case  has  some  analogy  with  the  phe- 
nomena of  blackmail,  ransom,  and  any  similar  enter- 
prise that  aims  to  get  something  for  nothing;  al- 
though it  is  carefully  to  be  noted  that  its  analogy 
with  these  illegitimate  forms  of  gainful  enterprise 
must,  of  course,  not  be  taken  to  cast  any  shadow  of 
suspicion  on  the  legitimacy  of  all  the  businesslike  sa- 
botage that  underlies  this  immaterial  corporate  cap- 
ital and  its  earning-capacity.  In  the  case  of  black- 
mail, ransom,  and  such  like  illegal  traffic  in  extor- 
tion, it  is  known  that  the  net  loss  suffered  by  the  loser 
and  the  gainer  together  exceeds  the  net  gain  which 
accrues  to  the  beneficiary,  by  as  much  as  the  cost  of 


FREE  INCOME  77 

enforcement  plus  the  incidental  inconvenience  to 
both  parties  to  the  transaction.  At  the  same  time, 
the  beneficiary's  subsequent  employment  and  con- 
sumption of  his  "  ill-gotten  gains,"  as  they  are  some- 
times called,  whether  he  consumes  them  in  riotous 
living  or  in  the  further  pursuit  of  the  same  profitable 
line  of  traffic, —  all  this,  it  is  believed,  does  not  in 
any  degree  benefit  the  rest  of  the  community.  As 
seen  in  the  perspective  of  the  common  good,  such 
enterprise  in  extortion  is  believed  to  be  quite  waste- 
fully  disserviceable. 

Now,  this  analogy  may  be  taken  for  what  it  is 
worth;  "Analogies  do  not  run  on  all-fours."  But 
when  seen  in  the  same  perspective,  the  question  of 
loss  and  gain  involved  in  the  case  of  these  intangible 
assets  and  their  earning-capacity  falls  into  something 
like  this  shape :  Does  the  total  net  loss  suffered  by 
the  community  at  large,  exclusive  of  the  owners  of 
these  intangibles,  exceed  two-hundred  percent  of  the 
returns  which  go  to  these  owners?  or,  Do  these 
intangibles  cost  the  community  more  than  twice  what 
they  are  worth  to  the  owners?  —  the  loss  to  the  com- 
munity being  represented  by  the  sum  of  the  overhead 
burden  carried  on  account  of  these  intangibles  plus 
the  necessary  curtailment  of  production  involved  in 
maintaining  profitable  prices.  The  overhead  bur- 
den is  paid  out  of  the  net  annual  production,  after 
the  net  annual  production  has  been  reduced  by  so 
much  as  may  be  necessary  to  "  maintain  prices  at  a 
reasonably  profitable  figure." 

A  few  years  ago  any  ordinarily  observant  person 
would  doubtless  have  answered  this  question  in  the 
negative,  probably  without  hesitation.  So  also,  any 


7  8  THE  VESTED  INTERESTS 

ordinarily  intelligent  votary  of  the  established  order, 
as,  e.  g.,  a  corporation  lawyer,  a  commercial  trade 
journal,  or  a  trade-union  official,  would  doubtless,  at 
that  period,  have  talked  down  such  a  question  out  of 
hand,  as  being  fantastically  preposterous.  That 
would  have  been  before  the  war  experience  began  to 
throw  light  into  the  dark  places  of  business  enter- 
prise as  conducted  under  the  new  order  of  industry. 
Today  (October,  1918)  — it  is  to  be  admitted  with 
such  emotion  as  may  come  to  hand  —  this  question 
is  one  which  can  be  entertained  quite  seriously,  in 
the  light  of  experience.  In  the  recent  past,  as  mat- 
ters have  stood  up  to  the  outbreak  of  the  war,  the 
ordinary  rate  of  production  in  the  essential  indus- 
tries under  businesslike  management  has  habitually 
and  by  deliberate  contrivance  fallen  greatly  short  of 
productive  capacity.  This  is  an  article  of  informa- 
tion which  the  experience  of  the  war  has  shifted  from 
the  rubric  of  "  Interesting  if  True "  to  that  of 
"  Common  Notoriety." 

The  question  as  to  how  much  this  "  incapacity  by 
advisement "  has  commonly  amounted  to  may  be  at- 
tempted somewhat  after  this  fashion.  Today,  under 
compulsion  of  patriotic  devotion,  fear,  shame  and 
bitter  need,  and  under  the  unprecedentedly  shrewd 
surveillance  of  public  officers  bent  on  maximum  pro- 
duction, the  great  essential  industries  controlled  by 
the  vested  interests  may,  one  with  another,  be  consid- 
ered to  approach  —  perhaps  even  conceivably  to  ex- 
ceed—  a  fifty-percent  efficiency;  as  counted  on  the 
basis  of  what  should  ordinarily  be  accomplished  by 
use  of  an  equally  costly  equipment  having  the  dis- 
posal of  an  equally  large  and  efficient  labor  force  and 


FREE  INCOME  79 

equally  good  natural  resources,  in  case  the  organisa- 
tion were  designed  and  managed  with  an  eye  single 
to  turning  out  a  serviceable  product,  instead  of,  as 
usual,  being  managed  with  an  eye  single  to  private 
gain  in  terms  of  price. 

To  the  spokesmen  of  "  business  as  usual  "  this 
rating  of  current  production  under  the  pressure  of 
war  needs  may  seem  extravagantly  low;  whereas,  to 
the  experts  in  industrial  engineering,  who  are  in  the 
habit  of  arguing  in  terms  of  material  cost  and  me- 
chanical output,  it  will  seem  extravagantly  high. 
Publicly,  and  concessively,  this  latter  class  will  speak 
of  a  25  percent  efficiency;  in  private  and  confiden- 
tially they  appear  disposed  to  say  that  the  rating 
should  be  nearer  to  10  percent  than  25.  To  avoid 
any  appearance  of  an  ungenerous  bias,  then,  present 
actual  production  in  these  essential  industries  may  be 
placed  at  something  approaching  50  percent  of  what 
should  be  their  normal  productive  capacity  in  the  ab- 
sence of  a  businesslike  control  looking  to  "  reason- 
able profits."  It  is  necessary  at  this  point  to  call  to 
mind  that  the  state  of  the  industrial  arts  under  the 
new  order  is  highly  productive, —  beyond  example. 

This  state  of  the  case,  that  production  in  the  es- 
sential industries  presumably  does  not  exceed  50  per- 
cent of  the  normal  productive  capacity,  even  when 
driven  under  the  jealous  eye  of  public  officers  vested 
with  power  to  act,  is  presumably  due  in  great  part  to 
the  fact  that  these  officers,  too,  are  capable  business 
men;  that  their  past  training  and  present  bent  is  such 
as  has  been  given  them  by  long,  exacting  and  suc- 
cessful experience  in  the  businesslike  management  of 
industry;  that  their  horizon  and  perspective  in  all 


8o  THE  VESTED  INTERESTS 

that  concerns  industry  are  limited  by  the  frame  of 
mind  that  is  native  to  the  countinghouse.  They, 
too,  have  learned  how  to  think  of  industry  and  its 
administration  in  terms  of  profit  on  investment,  and, 
indeed,  in  no  other  terms;  that  being  as  near  as  their 
daily  work  has  allowed  them  to  take  stock  of  the 
ways  and  means  of  industry.  So  that  they  are  still 
guided,  in  some  considerable  part,  by  considerations 
of  what  is  decent,  equitable  and  prudent  in  the  sight 
of  conservative  business  men;  and  this  bias  neces- 
sarily goes  with  them  in  their  dealings  with  those 
ubiquitous,  intricate  and  systematic  dislocations  of 
the  industrial  system  which  have  been  found  profita- 
ble in  the  management  of  industry  on  a  footing  of 
competitive  sabotage.  They  still  find  it  reasonable 
to  avoid  any  derangement  of  those  vested  interests 
that  live  on  this  margin  of  intangible  assets  that  rep- 
resents capitalised  withdrawal  of  efficiency. 

In  so  characterising  the  situation  there  is,  of 
course,  no  inclination  to  impute  blame  to  these  bus- 
inesslike officials  who  are  patriotically  giving  their 
best  abilities  and  endeavors  to  this  work  of  enforc- 
ing an  increased  production  in  the  essential  indus- 
tries and  diverting  needed  labor  and  materials  from 
the  channels  of  waste;  nor  is  it  intended  to  cast  as- 
persions on  the  good  faith  or  the  honorable  motives 
of  those  grave  captains  of  industry  whom  the  offi- 
cials find  it  so  difficult  to  divert  from  the  business 
man's  straight  and  narrow  path  of  charging  what 
the  traffic  will  bear.  "  They  are  all  honorable 
men."  But  like  other  men  they  are  creatures  of 
habit;  and  their  habit  of  mind  is  the  outcome  of  ex- 
perience in  that  class  of  large,  responsible  and  re- 


FREE  INCOME  81 

munerative  business  affairs  that  He  somewhat  remote 
from  the  domain  of  technology,  from  that  field  where 
the  mechanistic  logic  of  the  industrial  arts  has  some- 
thing to  say.  It  is  only  that  the  situation  as  here 
spoken  of  rests  on  settled  usage,  and  that  the  usage 
is  such  as  the  businesslike  frame  of  mind  is  suited  to; 
at  the  same  time  that  this  businesslike  usage,  of  fixed 
charges,  vested  interests  and  reasonable  profits,  does 
not  fully  comport  with  the  free  swing  of  the  indus- 
trial arts  as  they  run  under  the  new  order  of  tech- 
nology. Nor  is  there  much  chance  of  getting  away 
from  this  situation  of  "  incapacity  by  advisement," 
even  under  pressure  of  patriotic  devotion,  fear, 
shame  and  need,  inasmuch  as  the  effectual  public 
opinion  has  learned  the  same  bias  and  will  scarcely 
entrust  the  conduct  of  its  serious  interests  to  any 
other  than  business  men  and  business  methods. 

To  return  to  the  argument.  It  may  be  conceded 
that  production  in  the  essential  industries,  under  pres- 
sure of  the  war  needs,  rises  to  something  like  a  50 
percent  efficiency.  At  the  same  time  it  is  presum- 
ably well  within  the  mark  to  say  that  this  current 
output  in  these  essential  industries  will  amount  to 
something  like  twice  their  ordinary  output  in  time 
of  peace  and  business  as  usual.  One-half  of  50  per- 
cent is  25  percent;  and  so  one  comes  in  sight  of  the 
provisional  conclusion  that  under  ordinary  condi- 
tions of  businesslike  management  the  habitual  net 
production  is  fairly  to  be  rated  at  something  like 
one-fourth  of  the  industrial  community's  productive 
capacity;  presumably  under  that  figure  rather  than 
over. 

In  the   absence   of   all   reflection   this   crude   es- 


82  THE  VESTED  INTERESTS 

timate  may  seem  recklessly  hasty,  perhaps  it  may 
even  be  thought  scandalously  unflattering  to  our  sub- 
stantial citizens  who  have  the  keeping  of  the  com- 
munity's material  welfare;  but  a  degree  of  observa- 
tion and  reflection  will  quickly  ease  any  feeling  of  an- 
noyance on  that  score.  So,  e.  g.,  if  the  account  as 
presented  above  does  not  appear  to  foot  up  to  as 
much  as  the  conclusion  would  seem  to  require,  fur- 
ther account  may  be  taken  of  that  side-line  of  bus- 
iness enterprise  that  spends  work  and  materials  in  an 
effort  to  increase  the  work  to  be  done,  and  to  in- 
crease the  cost  per  unit  of  the  increased  work;  all 
for  the  benefit  of  the  earnings  of  the  concern  for 
whose  profit  it  is  arranged.  It  may  be  called  to 
mind  that  there  still  are  half-a-dozen  railway  pas- 
senger stations  in  such  a  town  as  Chicago,  especially 
designed  to  work  at  cross  purposes  and  hinder  the 
traffic  of  competing  railway  corporations;  that  on 
the  basis  of  this  ingeniously  contrived  retardation  of 
traffic  there  has  been  erected  a  highly  prosperous 
monopoly  in  the  transfer  of  baggage  and  passengers, 
employing  a  large  equipment  and  labor  force  and 
costing  the  traveling  public  some  millions  of  useless 
outlay  yearly;  with  nothing  better  to  show  for  it 
than  delay,  confusion,  wear  and  tear,  casualties  and 
wrangles,  twenty-four  hours  a  day;  and  that  this  ar- 
rangement is,  quite  profitably,  duplicated  through- 
out the  country  as  often  and  on  as  large  a  scale  as 
there  are  towns  in  which  to  install  it.  So  again, 
there  is  an  exemplary  weekly  periodical  of  the  most 
widely  reputable  and  most  profitable  class,  with  a 
circulation  of  more  than  two  million,  which  habit- 
ually carries  some  60  to  80  large  pages  of  competi- 


FREE  INCOME  •      83 

tive  advertising  matter,  at  a  time  when  the  most  ex- 
acting economy  of  work  and  materials  is  a  matter 
of  urgent  and  acknowledged  public  need;  with  noth- 
ing better  to  show  for  it  than  an  increased  cost  of  all 
the  goods  advertised,  most  of  which  are  superfluities. 
This,  too,  is  only  a  typical  case,  duplicated  by  the 
thousand,  as  nearly  as  the  businesslike  management 
of  the  other  magazines  and  newspapers  can  achieve 
the  same  result.  These  are  familiar  instances  of 
business  as  usual  under  the  new  order  of  industry. 
They  are  neither  extreme  nor  extraordinary.  In- 
deed the  whole  business  community  is  run  through 
with  enterprise  of  this  kind  so  thoroughly  that  this 
may  fairly  be  said  to  be  the  warp  of  the  fabric.  In 
effect,  of  course,  it  is  an  enterprise  in  subreption;  but 
in  point  of  moral  sentiment  and  conscious  motive  it 
is  nothing  of  the  kind. 

All  these  intricate  arrangements  for  doing  those 
things  that  we  ought  not  to  have  done  and  leaving 
undone  those  things  that  we  ought  to  have  done  are 
by  no  means  maliciously  intended.  They  are  only 
the  ways  and  means  of  diverting  a  sufficient  share  of 
the  annual  product  to  the  benefit  of  the  legitimate 
beneficiaries,  the  kept  classes.  But  this  apparatus 
and  procedure  for  capturing  and  dividing  this  share 
of  the  community's  annual  dividend  is  costly  —  one 
is  tempted  to  say  unduly  costly.  It  foots  up  to,  per- 
haps, something  like  one-half  of  the  work  done,  and 
it  is  occupied  with  taking  over  something  like  one-half 
of  the  output  produced  by  the  remaining  one-half  of 
the  year's  work.  And  yet,  as  a  business  proposi- 
tion it  seems  sound  enough,  inasmuch  as  the  income 
which  it  brings  to  the  beneficiaries  will  presumably 


84  THE  VESTED  INTERESTS 

foot  up  to  something  like  one-half  of  the  country's 
annual  production. 

There  is  nothing  gained  by  finding  fault  with  any 
of  this  businesslike  enterprise  that  is  bent  on  getting 
something  for  nothing,  at  any  cost.  After  all,  it  is 
safe  and  sane  business,  sound  and  legitimate,  and 
carried  on  blamelessly  within  the  rules  of  the  game. 
One  may  also  dutifully  believe  that  there  is  really 
no  harm  done,  or  at  least  that  it  might  have  been 
worse.  It  is  reassuring  to  note  that  at  least  hith- 
erto the  burden  of  this  overhead  charge  of  50  per- 
cent plus  has  not  broken  the  back  of  the  industrial 
community.  It  also  serves  to  bring  under  a  strong 
light  the  fact  that  the  state  of  the  industrial  arts  as  it 
runs  under  the  new  order  is  highly  productive,  inor- 
dinately productive.  And,  finally,  there  should  be 
some  gain  of  serenity  in  realising  how  singularly 
consistent  has  been  the  run  of  economic  law  through 
the  ages,  and  recalling  once  more  the  reflection 
which  John  Stuart  Mill  arrived  at  some  half-a-cen- 
tury  ago,  that,  "  Hitherto  it  is  questionable  if  all  the 
mechanical  inventions  yet  made  have  lightened  the 
day's  toil  of  any  human  being." 


V 

THE    VESTED   INTERESTS 

THERE  are  certain  saving  clauses  in  common  use 
among  persons  who  speak  for  that  well-known  order 
of  pecuniary  rights  and  obligations  which  the  mod- 
ern point  of  view  assumes  as  "  the  natural  state  of 
man."  Among  them  are  these :  "  Given  the  state 
of  the  industrial  arts";  "Other  things  remaining 
the  same  ";  "  In  the  long  run  ";  "  In  the  absence  of 
disturbing  causes."  It  has  been  the  praiseworthy 
endeavor  of  the  votaries  of  this  established  law  and 
custom  to  hold  fast  the  good  old  plan  on  a  strategic 
line  of  interpretation  resting  on  these  provisos. 
There  have  been  painstaking  elucidations  of  what  is 
fundamental  and  intrinsic  in  the  way  of  human  insti- 
tutions, of  what  essentially  ought  to  be,  and  of  what 
must  eventually  come  to  pass  in  the  natural  course 
of  time  and  change  as  it  is  believed  to  run  along  un- 
der the  guidance  of  those  indefeasible  principles  that 
make  up  the  modern  point  of  view.  And  the  dis- 
quieting incursions  of  the  New  Order  have  been  dis- 
allowed as  not  being  of  the  essence  of  Nature's  con- 
tract with  mankind,  within  the  constituent  principles 
of  the  modern  point  of  view  stabilised  in  the  eight- 
eenth century. 

Now,  as  has  already  been  remarked  in  an  earlier 
passage,  the  state  of  the  industrial  arts  has  at  no 


86  THE  VESTED  INTERESTS 

time  continued  unchanged  during  the  modern  era; 
consequently  other  things  have  never  remained  the 
same;  and  in  the  long  run  the  outcome  has  always 
been  shaped  by  the  disturbing  causes.  All  this  re- 
flects no  discredit  on  the  economists  and  publicists 
who  so  have  sketched  out  the  natural  run  of  the  pres- 
ent and  future  in  the  dry  light  of  the  eighteenth-cen- 
tury principles,  since  their  reservations  have  not  been 
observed.  The  arguments  have  been  as  good  as  the 
premises  on  which  they  proceed,  and  the  premises 
have  once  been  good  enough  to  command  unques- 
tioning assent;  although  that  is  now  some  time  ago. 
The  fault  appears  to  lie  in  the  unexampled  shifty 
behavior  of  the  latterday  facts.  Yet  however 
shifty,  these  facts,  too,  are  as  stubborn  as  others  of 
their  kind. 

The  system  of  free  competition,  self-help,  equal 
opportunity  and  free  bargaining  which  is  contem- 
plated by  the  modern  point  of  view,  assumes  an  in- 
dustrial situation  in  which  the  work  and  trading  of 
any  given  individual  or  group  can  go  on  freely  by  it- 
self, without  materially  helping  or  hindering  the 
equally  untrammeled  working  of  the  rest.  It  has, 
of  course,  always  been  recognised  that  the  coun- 
try's industry  makes  up  something  of  a  connected 
system;  so  that  there  would  necessarily  be  some  de- 
gree of  mutual  adjustment  and  accommodation 
among  the  many  self-sufficient  working  units  which 
together  make  up  the  industrial  community;  but  these 
working  units  have  been  conceived  to  be  so  nearly 
independent  of  one  another  that  the  slight  measure 
of  running  adjustment  needed  could  be  sufficiently 


THE  VESTED  INTERESTS  87 

taken  care  of  by  free  competition  in  the  market. 
This  assumption  has,  of  course,  never  been  altogether 
sound  at  any  stage  in  the  industrial  advance;  but  it 
has  at  least  been  within  speaking  distance  of  facts 
so  late  as  the  eighteenth  century.  It  was  a  possible 
method  of  keeping  the  balance  in  the  industrial  sys- 
tem before  the  coming  of  the  machine  industry. 
Quite  evidently  it  commended  itself  to  the  enlight- 
ened common  sense  of  that  time  as  a  sufficiently 
workable  ideal.  So  much  so  that  it  then  appeared 
to  be  the  most  practical  solution  of  the  industrial  and 
social  difficulties  which  beset  that  generation.  It  is 
fairly  to  be  presumed  that  the  plan  would  still  be 
workable  in  some  fashion  today  if  the  conditions 
which  then  prevailed  had  continued  unchanged 
through  the  intervening  one  hundred  and  fifty  years, 
if  other  things  had  remained  the  same.  All  that 
was,  in  effect,  before  the  coming  of  the  machine  tech- 
nology and  the  later  growth  of  population. 

But  as  it  runs  today,  according  to  the  new  indus- 
trial order  set  afoot  by  the  machine  technology,  the 
carrying-on  of  the  community's  industry  is  not  well 
taken  care  of  by  the  loose  corrective  control  which 
is  exercised  by  a  competitive  market.  That  method 
is  too  slow,  at  the  best,  and  too  disjointed.  The  in- 
dustrial system  is  now  a  wide-reaching  organisation 
of  mechanical  processes  which  work  together  on  a 
comprehensive  interlocking  plan  of  give  and  take, 
in  which  no  one  section,  group,  or  individual  unit  is 
free  to  work  out  its  own  industrial  salvation  except 
in  active  copartnership  with  the  rest;  and  the  whole 
of  which  runs  on  as  a  moving  equilibrium  of  forces 
in  action.  This  system  of  interlocking  processes 


88  THE  VESTED  INTERESTS 

and  mutually  dependent  working  units  is  a  more  or 
less  delicately  balanced  affair.  Evidently  the  sys- 
tem has  to  be  taken  as  a  whole,  and  evidently  it  will 
work  at  its  full  productive  capacity  only  on  condition 
that  the  coordination  of  its  interlocking  processes  be 
maintained  at  a  faultless  equilibrium,  and  only  when 
its  constituent  working  units  are  allowed  to  run  full 
and  smooth.  But  a  moderate  derangement  will  not 
put  it  out  of  commission.  It  will  work  at  a  lower 
efficiency,  and  continue  running,  in  spite  of  a  very 
considerable  amount  of  dislocation;  as  is  habitually 
the  case  today. 

At  the  same  time  any  reasonably  good  working 
efficiency  of  the  industrial  system  is  conditioned  on  a 
reasonably  good  coordination  of  these  working 
forces;  such  as  will  allow  each  and  several  of  the 
working  units  to  carry  on  at  the  fullest  working  ca- 
pacity that  will  comport  with  the  unhampered  work- 
ing of  the  system  as  a  balanced  whole.  But  evi- 
dently, too,  any  dislocation,  derangement  or  retarda- 
tion of  the  work  at  any  critical  point  —  which  comes 
near  saying  at  any  point  —  in  this  balanced  system  of 
work  will  cause  a  disproportionately  large  derange- 
ment of  the  whole.  The  working  units  of  the  indus- 
trial system  are  no  longer  independent  of  one  an- 
other under  the  new  order. 

It  is,  perhaps,  necessary  to  add  that  the  industrial 
system  has  not  yet  reached  anything  like  the  last 
degree  of  development  along  this  line;  it  is  at  least 
not  yet  a  perfected  automatic  mechanism.  But  it 
should  also  be  added  that  with  each  successive  ad- 
vance into  the  new  order  of  industry  created  by  the 
machine  technology,  and  at  a  continually  accelerated 


THE  VESTED  INTERESTS  89 

rate  of  advance,  the  processes  of  industry  are  being 
more  thoroughly  standardised,  the  working  units 
of  the  system  as  a  whole  demand  a  more  undeviating 
maintenance  of  its  moving  equilibrium,  a  more  ex- 
acting mechanical  correlation  of  industrial  opera- 
tions and  equipment.  And  it  seems  reasonable  to  ex- 
pect that  things  are  due  to  move  forward  along  this 
line  still  farther  in  the  calculable  future,  rather  than 
the  reverse. 

This  state  of  things  would  reasonably  suggest  that 
the  control  of  the  industrial  system  had  best  be  en- 
trusted to  men  skilled  in  these  matters  of  technology. 
The  industrial  system  does  its  work  in  terms  of  me- 
chanical efficiency,  not  in  terms  of  price.  It  should 
accordingly  seem  reasonable  to  expect  that  its  con- 
trol would  be  entrusted  to  men  experienced  in  the 
ways  and  means  of  technology,  men  who  are  in  the 
habit  of  thinking  about  these  matters  in  such  terms 
as  are  intelligible  to  the  engineers.  The  material 
welfare  of  the  community  is  bound  up  with  the  due 
working  of  this  industrial  system,  which  depends  on 
the  expert  knowledge,  insight,  and  disinterested 
judgment  with  which  it  is  administered.  It  should 
accordingly  have  seemed  expedient  to  entrust  its  ad- 
ministration to  the  industrial  engineers,  rather  than 
to  the  captains  of  finance.  The  former  have  to  do 
with  productive  efficiency,  the  latter  with  the  higgling 
of  the  market. 

However,  by  historical  necessity  the  discretionary 
control  in  all  that  concerns  this  highly  technological 
system  of  industry  has  come  to  vest  in  those  persons 
who  are  highly  skilled  in  the  higgling  of  the  market, 
the  masters  of  financial  intrigue.  And  so  great  is 


90  THE  VESTED  INTERESTS 

the  stability  of  that  system  of  law  and  custom  by 
grace  of  which  these  persons  claim  this  power,  that 
any  disallowance  of  their  plenary  control  over  the 
material  fortunes  of  the  community  is  scarcely  within 
reason.  All  the  while  the  progressive  shifting  of 
ground  in  the  direction  of  a  more  thoroughly  mech- 
anistic organisation  of  industry  goes  on  and  works 
out  into  a  more  and  more  searching  standardisation 
of  works  and  methods  and  a  more  exacting  correla- 
tion of  industries,  in  an  ever  increasingly  large  and 
increasingly  sensitive  industrial  system.  All  the 
while  the  whole  of  it  grows  less  and  less  manageable 
by  business  methods;  and  with  every  successive  move 
the  control  exercised  by  the  business  men  in  charge 
grows  wider,  more  arbitrary,  and  more  incompatible 
with  the  common  good. 

Business  affairs,  in  the  narrow  sense  of  the  ex- 
pression, have  in  time  necessarily  come  in  for  an 
increasing  share  of  the  attention  of  those  who  exer- 
cise the  control.  The  businesslike  manager's  atten- 
tion is  continually  more  taken  up  with  "  the  financial 
end  "  of  the  concern's  interests;  so  that  by  enforced 
neglect  he  is  necessarily  leaving  more  of  the  details 
of  shop  management  and  supervision  of  the  works 
to  subordinates,  largely  to  subordinates  who  are  pre- 
sumed to  have  some  knowledge  of  technological 
matters  and  no  immediate  interest  in  the  run  of  the 
market.  They  are  in  fact  persons  who  are  pre- 
sumed to  have  this  knowledge  by  the  business  men 
who  have  none  of  it.  But  the  larger  and  final  dis- 
cretion, which  affects  the  working  of  the  industrial 
system  as  a  whole,  or  the  orderly  management  of 
any  considerable  group  of  industries  within  the  gen- 


THE  VESTED  INTERESTS  91 

eral  system, —  all  that  is  still  under  the  immediate 
control  of  the  businesslike  managers,  each  of  whom 
works  for  his  own  concern's  gain  without  much  after- 
thought. The  final  discretion  still  rests  with  the 
businesslike  directorate  of  each  concern  —  the 
owner  or  the  board  —  even  in  all  questions  of  phys- 
ical organisation  and  technical  management;  al- 
though this  businesslike  control  of  the  details  of  pro- 
duction necessarily  comes  to  little  else  than  accep- 
tance, rejection,  or  revision  of  measures  proposed 
by  the  men  immediately  in  charge  of  the  works;  to- 
gether with  a  constant  check  on  the  rate  and  volume 
of  output,  with  a  view  to  the  market. 

In  very  great  part  the  directorate's  control  of  the 
industry  has  practically  taken  the  shape  of  a  veto  on 
such  measures  of  production  as  are  not  approved  by 
the  directorate  for  businesslike  reasons,  that  is  to 
say  for  purposes  of  private  gain.  Business  is  a  pur- 
suit of  profits,  and  profits  are  to  be  had  from  profit- 
able sales,  and  profitable  sales  can  be  made  only  if 
prices  are  maintained  at  a  profitable  level,  and  prices 
can  be  maintained  only  if  the  volume  of  marketable 
output  is  kept  within  reasonable  limits;  so  that  the 
paramount  consideration  in  such  business  as  has  to 
do  with  the  staple  industries  is  a  reasonable  limita- 
tion of  the  output.  "  Reasonable  "  means  "  what 
the  traffic  will  bear  " ;  that  is  to  say,  "  what  will  yield 
the  largest  net  return." 

Hence  in  the  larger  mechanical  industries,  which 
set  the  pace  for  the  rest  and  which  are  organised  on 
a  standardised  and  more  or  less  automatic  plan,  the 
current  oversight  of  production  by  their  businesslike 
directorate  does  not  effectually  extend  much  beyond 


92  THE  VESTED  INTERESTS 

the  regulation  of  the  output  with  a  view  to  what 
the  traffic  will  bear;  and  in  this  connection  there  is 
very  little  that  the  business  men  in  charge  can  do  ex- 
cept to  keep  the  output  short  of  productive  capacity 
by  so  much  as  the  state  of  the  market  seems  to  re- 
quire; it  does  not  lie  within  their  competence  to  in- 
crease the  output  beyond  that  point,  or  to  increase 
the  productive  capacity  of  their  works,  except  by 
way  of  giving  the  technical  men  permission  to  go 
ahead  and  do  it. 

The  business  man's  place  in  the  economy  of  na- 
ture is  to  "  make  money,"  not  to  produce  goods. 
The  production  of  goods  is  a  mechanical  process,  in- 
cidental to  the  making  of  money;  whereas  the  mak- 
ing of  money  is  a  pecuniary  operation,  carried  on  by 
bargain  and  sale,  not  by  mechanical  appliances  and 
powers.  The  business  men  make  use  of  the  me- 
chanical appliances  and  powers  of  the  industrial  sys- 
tem, but  they  make  a  pecuniary  use  of  them.  And 
in  point  of  fact  the  less  use  a  business  man  can  make 
of  the  mechanical  appliances  and  powers  under  his 
charge,  and  the  smaller  a  product  he  can  contrive  to 
turn  out  for  a  given  return  in  terms  of  price,  the 
better  it  suits  his  purpose.  The  highest  achieve- 
ment in  business  is  the  nearest  approach  to  getting 
something  for  nothing.  What  any  given  business 
concern  gains  must  come  out  of  the  total  output  of 
productive  industry,  of  course;  and  to  that  extent 
any  given  business  concern  has  an  interest  in  the  con- 
tinued production  of  goods.  But  the  less  any  given 
business  concern  can  contrive  to  give  for  what  it 
gets,  the  more  profitable  its  own  traffic  will  be. 


THE  VESTED  INTERESTS  93 

Business  success  means  "  getting  the  best  of  the  bar- 
gain." 

The  common  good,  so  far  as  it  is  a  question  of 
material  welfare,  is  evidently  best  served  by  an  un- 
hampered working  of  the  industrial  system  at  its  full 
capacity,  without  interruption  or  dislocation.  But  it 
is  equally  evident  that  the  owner  or  manager  of  any 
given  concern  or  section  of  this  industrial  system 
may  be  in  a  position  to  gain  something  for  himself 
at  the  cost  of  the  rest  by  obstructing,  retarding  or 
dislocating  this  working  system  at  some  critical  point 
in  such  a  way  as  will  enable  him  to  get  the  best  of 
the  bargain  in  his  dealings  with  the  rest.  This  ap- 
pears constantly  in  the  altogether  usual,  and  alto- 
gether legitimate,  practice  of  holding  out  for  a  bet- 
ter price.  So  also  in  the  scarcely  less  usual,  and  no 
less  legitimate,  practice  of  withholding  needed 
ground  or  right  of  way,  or  needed  materials  or  in- 
formation, from  a  business  rival.  Indeed  it  has 
been  rumored  that  one  of  the  usual  incentives  which 
drew  the  patriotic  one-dollar-a-year  men  from  their 
usual  occupations  to  the  service  of  their  country  was 
the  chance  of  controlling  information  by  means  of 
which  to  "  put  it  over  "  their  business  rivals.  All 
these  things  are  usual  and  a  matter  of  course,  be- 
cause business  management  under  the  conditions  cre- 
ated by  the  new  order  of  industry  is  in  great  part 
made  up  of  these  things.  Sabotage  of  this  kind  is 
indispensable  to  any  large  success  in  industrial  bus- 
iness. 

But  it  is  also  evident  that  the  private  gain  which 
the  business  concerns  come  in  for  by  this  manage- 


94  THE  VESTED  INTERESTS 

ment  entails  a  loss  on  the  rest  of  the  community,  and 
that  the  loss  suffered  by  the  rest  of  the  community  is 
necessarily  larger  than  the  total  gains  which  these 
manoeuvres  bring  to  the  business  concerns;  inasmuch 
as  the  friction,  obstruction  and  retardation  of  the 
moving  equilibrium  of  production  involved  in  this 
businesslike  sabotage  necessarily  entails  a  dispropor- 
tionate curtailment  of  output. 

However,  it  is  well  to  call  to  mind  that  the  com- 
munity will  still  be  able  to  get  along,  perhaps  even 
to  get  along  very  tolerably,  in  spite  of  a  very  ap- 
preciable volume  of  sabotage  of  this  kind;  even 
though  it  does  reduce  the  net  productive  capacity 
to  a  fraction  of  what  it  would  be  in  the  absence  of 
all  this  interference  and  retardation;  for  the  current 
state  of  the  industrial  arts  is  highly  productive.  So 
much  so  that  in  spite  of  all  this  deliberate  waste  and 
confusion  that  is  set  afoot  in  this  way  for  private 
gain,  there  still  is  left  over  an  absolutely  large  res- 
idue of  net  production  over  cost.  The  community 
still  has  something  to  go  on.  The  available  margin 
of  free  income  —  that  is  to  say,  the  margin  of  pro- 
duction over  cost  —  is  still  wide;  so  that  it  allows 
a  large  latitude  for  playing  fast  and  loose  with  the 
community's  livelihood. 

Now,  these  businesslike  manoeuvres  of  deviation 
and  delay  are  by  no  means  to  be  denounced  as  being 
iniquitous  or  unfair,  although  they  may  have  an  un- 
fortunate effect  on  the  conditions  of  life  for  the  com- 
mon man.  That  is  his  misfortune,  which  law  and 
custom  count  on  his  bearing  with  becoming  fortitude. 
These  are  the  ordinary  and  approved  means  of  car- 
rying on  business  according  to  the  liberal  principles 


THE  VESTED  INTERESTS  95 

of  free  bargain  and  self-help  as  established  in  the 
eighteenth  century;  and  they  are  in  the  main  still 
looked  on  as  a  meritorious  exercise  of  thrift  and  sa- 
gacity —  duly  so  looked  on,  it  is  to  be  presumed. 
At  least  such  is  the  prevailing  view  among  the  sub- 
stantial citizens,  who  are  in  a  position  to  speak  from 
first-hand  knowledge.  It  is  only  that  the  exercise 
of  these  homely  virtues  on  the  large  scale  on  which 
business  is  now  conducted,  and  when  dealing  with 
the  wide-reaching  articulations  of  the  industrial  sys- 
tem under  the  new  order  of  technology, —  under 
these  uncalled-for  circumstances  the  unguarded  ex- 
ercise of  these  virtues  entails  business  disturbances 
which  are  necessarily  large,  and  which  bring  on  mis- 
chievous consequences  in  industry  which  are  dispro- 
portionately larger  still. 

It  is  also  true,  the  businesslike  managers  of  indus- 
trial enterprise  have  also  other  things  to  do,  besides 
holding  the  marketable  supply  of  goods  and  serv- 
ices down  to  such  an  amount  as  is  expected  to  bring 
the  most  profitable  prices,  or  diverting  credulous 
customers  from  one  seller  to  another  by  competi- 
tive advertising.  But  it  should  also  be  noted  that 
there  is  next  to  no  business  enterprise,  if  any,  whose 
chief  end  is  not  profitable  sales,  or  profitable  bar- 
gains which  mean  the  same  thing  as  profitable  sales. 
They  are  therefore  engaged  unremittingly  in  one  or 
another  of  the  approved  lines  of  competitive  man- 
agement with  a  view  to  profitable  traffic  for  them- 
selves, and  to  creating  an  advantage  for  themselves 
in  the  market.  It  is  a  poor-spirited  concern  that 
does  not  constantly  aim  to  create  for  itself  such  a  po- 
sition of  advantage  as  will  give  it  something  of  a 


96  THE  VESTED  INTERESTS 

vested  interest  in  the  traffic.  Such  a  concern  is 
scarcely  fit  to  survive ;  nor  is  it  likely  to. 

It  is  not  that  business  enterprise  is  wholly  taken 
up  with  such  like  manoeuvres  of  restraint,  obstruc- 
tion and  competitive  selling.  This  is  only  part  of 
the  business  men's  everyday  work,  although  it  is  not 
a  minor  part.  In  any  competitive  business  commun- 
ity this  line  of  duties  will  take  up  a  large  share  of  the 
business  men's  attention  and  will  engage  their  best 
and  most  businesslike  abilities.  More  particularly 
in  the  management  of  the  greater  industrial  enter- 
prises of  the  present  day,  the  larger  as  well  as  the 
more  lucrative  part  of  the  duties  of  those  who  direct 
affairs  appears  commonly  to  be  of  this  nature.  That 
such  should  be  the  case  lies  in  the  nature  of  things 
under  the  circumstances  which  now  prevail.  It 
would  not  be  far  out  of  the  way  to  say  that  any  oc- 
cupations in  which  this  rule  does  not  apply  are  occu- 
pations which  have  not,  or  have  not  yet,  come  into 
line  as  members  in  good  standing  in  that  new  order 
of  business  enterprise  which  is  based  on  the  machine 
industry  governed  by  the  liberal  principles  of  the 
eighteenth  century. 

"  Our  people,  moreover,  do  not  wait  to  be  coached 
and  led.  They  know  their  own  business,  are  quick 
and  resourceful  at  every  readjustment,  definite  in 
purpose,  and  self-reliant  in  action.  .  .  .  The  Ameri- 
can business  man  is  of  quick  initiative.  The  ordinary 
and  normal  processes  of  private  initiative  will  not, 
however,  provide  immediate  employment  for  all  of 
the  men  of  our  returning  armies."  Such  is  the  es- 
teem in  which  American  business  men  are  held  by 
American  popular  opinion  and  such  is  also  the  view 


THE  VESTED  INTERESTS  97 

which  American  business  men  are  inclined  to  take 
of  their  own  place  and  value  in  the  community. 
There  need  be  no  quarrel  with  it.  But  it  will  be  in 
place  to  call  attention  to  the  statement  that  "  The  or- 
dinary and  normal  processes  of  private  initiative  will 
not,  however,  provide  immediate  employment  for  all 
the  men."  It  should  be  added,  as  is  plain  to  all  men, 
that  these  ordinary  and  normal  processes  of  private 
initiative  never  do  provide  employment  for  all  the 
men  available.  In  fact,  unemployment  is  an  ordi- 
nary and  normal  phenomenon.  So  that  even  in  the 
present  emergency,  when  the  peoples  of  Christen- 
dom are  suffering  privation  together  for  want  of 
goods  needed  for  immediate  use,  the  ordinary  and 
normal  processes  of  private  initiative  are  not  to  be 
depended  on  to  employ  all  the  available  man  power 
for  productive  industry.  The  reason  is  well  known 
to  all  men;  so  well  known  as  to  be  uniformly  taken 
for  granted  as  a  circumstance  which  is  beyond  hu- 
man remedy.  It  is  the  simple  and  obvious  fact  that 
the  ordinary  and  normal  processes  of  private  initia- 
tive are  the  same  thing  as  "  business  as  usual,"  which 
controls  industry  with  a  view  to  private  gain  in 
terms  of  price;  and  the  largest  private  gain  in  terms 
of  price  can  not  be  had  by  employing  all  the  availa- 
ble man  power  and  speeding  up  the  industries  to 
their  highest  productivity,  even  when  all  the  peoples 
of  Christendom  are  suffering  privation  together 
for  want  of  the  ordinary  necessaries  of  life.  Pri- 
vate initiative  means  business  enterprise,  not  indus- 
try. 

But  all  the  same,  the  profits  of  business  come  out 
of   the   product   of   industry;   and   industry   is  con- 


98  THE  VESTED  INTERESTS 

trolled,  accelerated  and  slowed  down  with  a  view  to 
business  profits;  and  one  outcome  of  this  arrange- 
ment so  far,  in  America,  has  been  the  complacent 
estimate  of  this  business  enterprise  formulated  in 
the  passage  quoted  above.  The  result  of  a  business- 
like management  of  industry  for  private  gain  in 
America  has  on  the  whole  been  a  fairly  high  level  of 
prosperity.  For  this  there  are  two  main  reasons: 
(a)  the  exceptionally  great  natural  resources  of  the 
country;  and  (b)  the  continued  growth  and  spread 
of  population,  (a)  Business  enterprise,  that  is  to 
say  private  ownership,  has  taken  over  these  re- 
sources, by  a  process  of  legalised  seizure,  and  has 
used  them  up  as  rapidly  as  may  be,  with  a  view  to 
private  gain;  all  of  which  has  gone  to  make  private 
business  profitable  to  that  extent,  although  it  has  im- 
poverished the  underlying  community  by  using  up  its 
natural  resources,  (b)  The  continued  growth  and 
spread  of  population,  by  natural  increase  and  by  im- 
migration, has  furnished  the  business  men  of  this 
country  a  continually  expanding  market  for  goods; 
both  for  goods  to  be  used  in  production  and  trans- 
portation and  for  finished  articles  of  consumption. 
Hence  the  American  business  men  have  been  in  the 
fortunate  position  of  not  having  to  curtail  the  out- 
put of  industry  harshly  and  persistently  at  all  points. 
It  is,  in  effect,  for  this  continued  growth  of  their  mar- 
ket, caused  by  the  growth  of  population,  that  the 
business  men  claim  credit  when  they  "  point  with 
pride  "  to  the  resourcefulness  and  quick  initiative 
with  which  they  have  "  developed  the  country."  To 
their  credit  be  it  said,  they  have  on  the  whole  not 
hindered  the  country's  prosperity  beyond  what  the 


THE  VESTED  INTERESTS  99 

traffic  would  bear;  and  the  peculiar  situation  of  this 
country  hitherto  has  been  such  that  the  traffic  of 
business  would  bear  a  nearly  uninterrupted  expansion 
of  industry  at  perhaps  something  like  one-half  of 
its  possible  rate  of  expansion.  To  their  own  gain, 
and  to  the  relief  of  the  underlying  community,  they 
have  been  enabled  profitably  to  let  the  country's  in- 
dustry run  on  a  moderately  high  level  of  efficiency, — 
with  more  or  less,  but  always  a  very  appreciable 
amount,  of  unemployment,  idle  plant,  and  waste  of 
resources. 

All  that  industry  which  comes  in  under  the  dom- 
inant machine  technology  —  that  is  to  say  all  that 
fairly  belongs  in  the  new  order  of  industry  —  is  now 
governed  by  business  men  for  business  ends,  in  what 
is  to  be  done  and  what  is  to  be  left  undone.  And 
wherever  business  enterprise  has  taken  over  the  di- 
rection of  things  the  management  is  directed  in  part 
to  the  production  of  a  marketable  supply,  and  in 
part  to  arranging  for  a  profitable  sale  of  the  supply; 
and  the  strategy  available  for  this  latter,  and  indis- 
pensable, work  lies  almost  wholly  within  the  lines  of 
competitive  management  already  spoken  of.  In 
case  these  manoeuvres  of  businesslike  deviation  and 
defeat  are  successful  and  fall  into  an  orderly  system 
whose  operation  may  be  continued  at  will,  or  in  so 
far  as  this  management  creates  an  assured  strategic 
advantage  for  any  given  business  concern,  the  result 
is  a  vested  interest.  This  may  then  eventually  be 
capitalised  in  due  form,  as  a  body  of  intangible  as- 
sets. As  such  it  goes  to  augment  the  business  com- 
munity's accumulated  wealth.  And  the  country  is 
statistically  richer  per  capita. 


ioo          THE  VESTED  INTERESTS 

A  vested  interest  is  a  marketable  right  to  get 
something  for  nothing.  This  does  not  mean  that 
the  vested  interests  cost  nothing.  They  may  even 
come  high.  Particularly  may  their  cost  seem  high 
if  the  cost  to  the  community  is  taken  into  account,  as 
well  as  the  expenditure  incurred  by  their  owners  for 
their  production  and  up-keep.  Vested  interests  are 
immaterial  wealth,  intangible  assets.  As  regards 
their  nature  and  origin,  they  are  the  outgrowth  of 
three  main  lines  of  businesslike  management:  (a) 
Limitation  of  supply,  with  a  view  to  profitable  sales; 
(b)  Obstruction  of  traffic,  with  a  view  to  profitable 
sales;  and  (c)  Meretricious  publicity,  with  a  view 
to  profitable  sales.  It  will  be  remarked  that  these 
are  matters  of  business,  in  the  strict  sense.  They 
are  devices  of  salesmanship,  not  of  workmanship; 
they  are  ways  and  means  of  driving  a  bargain,  not 
ways  and  means  of  producing  goods  or  services. 
The  residue  which  stands  over  as  a  product  of  these 
endeavors  is  in  the  nature  of  an  intangible  asset,  an 
article  of  immaterial  wealth;  not  an  increase  of  the 
tangible  equipment  or  the  material  resources  in 
hand.  The  enterprising  owners  of  the  concern  may 
be  richer  by  that  much,  and  so  perhaps  may  the  bus- 
iness community  as  a  whole  —  though  that  is  a  pre- 
cariously dubious  point  —  but  the  community  at 
large  is  no  better  off  in  any  material  respect. 

This  account,  of  course,  assumes  that  all  this  busi- 
ness is  conducted  strictly  within  the  lines  of  commer- 
cial honesty.  It  would  only  be  tedious  and  mislead- 
ing to  follow  up  and  take  account  of  that  scattering 
recourse  to  force  or  fraud  that  will  never  wholly  be 
got  rid  of  in  the  pursuit  of  gain,  whether  by  way  of 


THE  VESTED  INTERESTS          ioi 

business  traffic  or  by  more  direct  methods.  Still,  it 
may  well  be  in  place  to  recall  that  the  code  of  com- 
mercial honesty  applies  only  between  the  parties  to 
a  bargain,  and  takes  no  account  of  the  interests  of 
any  third  party,  except  by  express  injunction  of  the 
law;  still  less  does  it  imply  any  degree  of  regard  for 
the  common  good.  Commercial  honesty,  of  course, 
is  the  honesty  of  self-help,  or  caveat  emptor,  which 
is  Latin  for  the  same  thing. 

In  the  ordinary  course  of  management  some  con- 
siderable amount  of  means  and  effort  is  spent  in  the 
pursuit  of  profitable  sales  and  in  creating  or  acquir- 
ing an  advantage  in  their  further  pursuit.  The  en- 
during result,  if  any,  is  a  body  of  intangible  assets 
in  the  nature  of  what  is  called  good-will.  The  or- 
dinary expenditure  incurred  for  this  purpose  is  so 
considerable,  in  fact,  that  the  "  selling  cost  "  will  not 
infrequently  be  far  and  away  the  larger  part  of  those 
costs  that  are  to  be  covered  by  the  price  of  adver- 
tised goods  or  advertised  traffic.  This  necessary 
consumption  of  work  and  means  with  a  view  to  in- 
crease sales  and  to  create  a  prospective  increase  of 
profits  is  to  be  counted  as  net  waste,  of  course;  in 
the  sense  that  it  contributes  nothing  to  the  total  out- 
put of  serviceable  goods,  present  or  prospective. 
The  net  aggregate  result  is  to  lay  equipment  idle, 
hinder  traffic,  and  induce  credulous  persons  now  and 
again  to  change  their  mind  about  what  things  they 
will  buy. 

Roughly,  any  business  concern  which  so  comes  in 
for  an  habitual  run  of  free  income  comes  to  have  a 
vested  right  in  this  "  income  stream,"  and  this  pre- 
ferred standing  of  the  concern  in  this  respect  is 


102          THE  VESTED  INTERESTS 

recognised  by  calling  such  a  concern  a  "  vested 
interest,"  or  a  "  special  interest."  Free  income  of 
this  kind,  not  otherwise  accounted  for,  may  be  cap- 
italised if  it  promises  to  continue,  and  it  can  then  be 
entered  on  the  books  as  an  item  of  immaterial 
wealth,  a  prospective  source  of  gain.  So  long  as  it 
has  not  been  embodied  in  a  marketable  legal  instru- 
ment, any  such  item  of  intangible  assets  will  be  noth- 
ing more  than  a  method  of  notation,  a  book-keeper's 
expedient.  But  it  can  readily  be  covered  with  some 
form  of  corporation  security,  as,  e.  g.,  preferred 
stock  or  bonds,  and  it  then  becomes  an  asset  in  due 
standing  and  a  vested  interest  endowed  with  legal 
tenure. 

Ordinarily  any  reasonably  uniform  and  permanent 
run  of  free  income  of  this  kind  will  be  covered  by 
an  issue  of  corporate  securities  with  a  fixed  rate  of 
interest  or  dividends;  whereupon  the  free  income  in 
question  becomes  a  fixed  overhead  charge  on  the 
concern's  business,  to  be  carried  as  an  item  of  or- 
dinary and  unavoidable  outlay  and  included  in  the 
necessary  cost  of  production  of  the  concern's  output 
of  goods  or  services.  But  whether  it  is  covered  by 
an  issue  of  vendible  securities  or  carried  in  a  less 
formal  manner  as  a  source  of  income  not  otherwise 
accounted  for,  such  a  vested  right  to  get  something 
for  nothing  will  rightly  be  valued  and  defended 
against  infraction  from  outside  as  a  proprietary 
right,  an  item  of  immaterial  but  very  substantial 
wealth. 

There  is  nothing  illegitimate  or  doubtful  about 
this  incorporation  of  unearned  income  into  the  or- 
dinary costs  of  production  on  which  "  reasonable 


THE  VESTED  INTERESTS          103 

profits  "  are  computed.  "  The  law  allows  it  and 
the  court  awards  it."  To  indicate  how  utterly  con- 
gruous it  all  is  with  the  new  order  of  business  enter- 
prise it  may  be  called  to  mind  that  not  only  do  the 
captains  of  corporation  finance  habitually  handle  the 
matter  in  that  way,  but  the  same  view  is  accepted  by 
those  public  authorities  who  are  called  in  to  review 
and  regulate  the  traffic  of  the  business  concerns  gov- 
erned by  these  captains  of  finance.  The  later  find- 
ings are  apparently  unequivocal,  to  the  effect  that 
when  once  a  run  of  free  income  has  been  capitalised 
and  docketed  as  an  asset  it  becomes  a  legitimate 
overhead  charge,  and  it  is  then  justly  to  be  counted 
among  necessary  costs  and  covered  by  the  price 
which  consumers  should  reasonably  pay  for  the  con- 
cern's offering  of  goods  or  services. 

Such  a  finding  has  come  to  be  a  fairly  well  settled 
matter  of  course  both  among  the  officials  and  among 
the  law-abiding  investors,  so  far  as  regards  those 
intangible  assets  that  are  covered  by  vendible  se- 
curities carrying  a  fixed  rate;  and  the  logic  of  this 
finding  is  doubtless  sound  according  to  the  principles 
of  the  modern  point  of  view,  which  were  put  into 
stable  form  before  the  coming  of  corporation 
finance.  There  may  still  be  a  doubt  or  a  question 
whether  valuable  perquisites  of  the  same  nature, 
which  continue  to  be  held  loosely  as  an  informal 
vested  interest,  as,  e.  g.,  merchantable  good-will,  are 
similarly  entitled  to  the  benefit  of  the  common  law 
which  secures  any  owner  in  the  usufruct  of  his  prop- 
erty. To  such  effect  have  commonly  been  the  find- 
ings of  courts  and  boards  of  inquiry,  of  Public 
Utility  Commissions,  of  such  bodies  as  the  Inter- 


io4          THE  VESTED  INTERESTS 

state  Commerce  Commission,  the  Federal  Trade 
Commission,  and  latterly  of  divers  recently  installed 
agencies  for  the  control  of  prices  and  output  in  be- 
half of  the  public  interest;  so,  for  instance,  right 
lately,  certain  decisions  and  recommendations  of  the 
War  Labor  Board. 

Any  person  with  a  taste  for  curiosities  of  human 
behavior  might  well  pursue  this  question  of  capital- 
ised free  income  into  its  further  convolutions,  and 
might  find  reasonable  entertainment  in  so  doing. 
The  topic  also  has  merits  as  a  subject  for  economic 
theory.  But  for  the  present  argument  it  may  suf- 
fice to  note  that  this  free  income  and  the  businesslike 
contrivances  by  which  it  is  made  secure  and  legiti- 
mate are  of  the  essence  of  this  new  order  of  business 
enterprise;  that  the  abiding  incentive  to  such  enter- 
prise lies  in  this  unearned  income;  and  that  the  in- 
tangible assets  which  are  framed  to  cover  this  line 
of  "  earnings,"  therefore,  constitute  the  substantial 
core  of  corporate  capital  under  the  new  order.  In 
passing,  it  may  also  be  noted  that  there  is  room  for  a 
division  of  sentiment  as  regards  this  disposal  of  the 
community's  net  production,  and  that  peremptory 
questions  of  class  interest  and  public  policy  touch- 
ing these  matters  may  presently  be  due  to  come  to 
a  hearing. 

To  some,  this  manner  of  presenting  the  case  may 
seem  unfamiliar,  and  it  may  therefore  be  to  the  pur- 
pose to  restate  the  upshot  of  this  account  in  the 
briefest  fashion:  Capital  —  at  least  under  the  new 
order  of  business  enterprise  —  is  capitalised  pros- 
pective gain.  From  this  arises  one  of  the  singu- 


THE  VESTED  INTERESTS          105 

larities  of  the  current  situation  in  business  and  its 
control  of  industry;  viz.,  that  the  total  face  value,  or 
even  the  total  market  value  of  the  vendible  securities 
which  cover  any  given  block  of  industrial  equipment 
and  material  resources,  and  which  give  title  to  its 
ownership,  always  and  greatly  exceeds  the  total  mar- 
ket value  of  the  equipment  and  resources  to  which 
the  securities  give  title  of  ownership,  and  to  which 
alone  in  the  last  resort  they  do  give  title.  The  mar- 
gin by  which  the  capitalised  value  of  the  going  con- 
cern exceeds  the  value  of  its  material  properties  is 
commonly  quite  wide.  Only  in  the  case  of  small  and 
feeble  corporations,  or  such  concerns  as  are  balanc- 
ing along  the  edge  of  bankruptcy,  does  this  margin  of 
intangible  values  narrow  down  and  tend  to  disap- 
pear. Any  industrial  business  concern  which  does 
not  enjoy  such  a  margin  of  capitalised  free  earning- 
capacity  has  fallen  short  of  ordinary  business  suc- 
cess and  is  possessed  of  no  vested  interest. 

This  margin  of  free  income  which  is  capitalised  in 
the  value  of  the  going  concern  comes  out  of  the  net 
product  of  industry  over  cost.  It  is  secured  by  suc- 
cessful bargaining  and  an  advantageous  position  in 
the  market;  which  involves  some  derangement  and 
retardation  of  the  industrial  system, —  so  much  so 
as  greatly  to  reduce  the  net  margin  of  production 
over  cost.  Approximately  the  whole  of  this  remain- 
ing margin  of  free  income  goes  to  the  business  men 
in  charge,  or  to  the  business  concerns  for  whom  this 
management  is  carried  on.  In  case  the  free  income 
which  is  gained  in  this  way  promises  to  continue,  it 
presently  becomes  a  vested  right.  It  may  then  be 
formally  capitalised  as  an  immaterial  asset  having  a 


io6          THE  VESTED  INTERESTS 

recognised  earning-capacity  equal  to  this  prospective 
free  income.  That  is  to  say,  the  outcome  is  a  cap- 
italised claim  to  get  something  for  nothing;  which 
constitutes  a  vested  interest.  The  total  gains  which 
hereby  accrue  to  the  owners  of  these  vested  rights 
amount  to  something  less  than  the  total  loss  suffered 
by  the  community  at  large  through  that  delay  of 
production  and  derangement  of  industry  that  is  in- 
volved in  the  due  exercise  of  these  rights.  In  other 
words,  and  as  seen  from  the  other  side,  this  free  in- 
come which  the  community  allows  its  kept  classes  in 
the  way  of  returns  on  these  vested  rights  and  in- 
tangible assets  is  the  price  which  the  community  is 
paying  to  the  owners  of  this  imponderable  wealth 
for  material  damage  greatly  exceeding  that  amount. 
But  it  should  be  kept  in  mind  and  should  be  duly 
credited  to  the  good  intentions  of  these  businesslike 
managers,  that  the  ulterior  object  sought  by  all  this 
management  is  not  the  100  per  cent  of  mischief  to 
the  community  but  only  the  10  per  cent  of  private 
gain  for  themselves  and  their  clients. 

So  far  as  they  bear  immediately  on  the  argument 
at  this  point  the  main  facts  are  substantially  as  set 
forth.  But  to  avoid  any  appearance  of  undue  nov- 
elty, as  well  as  to  avoid  the  appearance  of  neglect- 
ing relevant  facts,  something  more  is  to  be  said  in 
the  same  connection.  It  is  particularly  to  be  noted 
that  credit  for  certain  material  benefits  should  be 
given  to  this  same  business  enterprise  whose  chief 
aim  and  effect  is  the  creation  of  these  vested  rights 
to  unearned  income.  It  will  be  apparent  to  anyone 
who  is  at  all  familiar  with  the  situation,  that  much 


THE  VESTED  INTERESTS          107 

of  the  intangible  assets  included  in  the  corporate  cap- 
ital of  this  country,  e.  g.,  does  not  represent  de- 
rangement which  is  actually  inflicted  on  the  indus- 
trial system  from  day  to  day,  but  rather  the  price  of 
delivery  from  derangement  which  the  businesslike 
managers  of  industry  have  taken  measures  to  dis- 
continue and  disallow. 

A  concrete  illustration  will  show  what  is  intended. 
For  some  time  past,  and  very  noticeably  during  the 
past  quarter-century,  the  ownership  of  the  large  in- 
dustrial concerns  has  constantly  been  drawing  to- 
gether into  larger  and  larger  aggregations,  with  a 
more  centralised  control.  The  case  of  the  steel  in- 
dustry is  typical.  For  a  considerable  period,  be- 
ginning in  the  early  nineties,  there  went  on  a  process 
of  combination  and  recombination  of  corporations 
in  this  industry,  resulting  in  larger  and  larger  ag- 
gregations of  corporate  ownership.  Commonly, 
though  perhaps  not  invariably,  some  of  the  unprofit- 
able duplication  and  work  at  cross  purposes  that  was 
necessarily  involved  in  the  earlier  parcelment  of 
ownership  was  got  rid  of  in  this  way,  gradually  with 
each  successive  move  in  this  concentration  of  own- 
ership and  control.  Perhaps  also  invariably  there 
was  a  substantial  saving  made  in  the  aggregate  vol- 
ume of  business  dealings  that  would  necessarily  be 
involved  in  carrying  on  the  industry.  Under  the 
management  of  many  concerns  each  intent  on  its 
own  pecuniary  interest,  the  details  of  business  trans- 
actions would  be  voluminous  and  intricate,  in  the 
way  of  contracts,  orders,  running  accounts,  working 
arrangements,  as  well  as  the  necessary  financial  op- 
erations, properly  so  called.  Much  of  this  would 


io8          THE  VESTED  INTERESTS 

be  obviated  by  taking  over  the  ownership  of  these 
concerns  into  the  hands  of  a  centralised  control;  and 
there  would  be  a  consequent  lessening  of  that  delay 
and  uncertainty  that  always  is  to  be  counted  on 
wherever  the  industrial  operations  have  to  wait  on 
the  completion  of  various  business  arrangements,  as 
they  habitually  do.  There  is  circumstantial  evi- 
dence that  very  material  gains  in  economy  and  ex- 
pedition commonly  resulted  from  these  successive 
moves  of  consolidation  in  the  steel  business.  And 
this  discontinuance  of  businesslike  delay  and  calcu- 
lated maladjustment  was  at  each  successive  move 
brought  to  a  secure  footing  and  capitalised  in  an  in- 
creased issue  of  negotiable  corporation  securities. 

It  will  also  be  recalled  that,  as  a  matter  of  routine, 
each  successive  consolidation  of  ownership  involved 
a  recapitalization  of  the  concerns  so  brought  together 
under  a  common  head,  and  that  commonly  if  not  in- 
variably the  resulting  recapitalisation  would  be 
larger  than  the  aggregate  earlier  capital  of  the  un- 
derlying corporations.  Even  where,  as  sometimes 
has  happened,  there  was  no  increase  made  in  the 
nominal  capitalisation,  there  would  still  result  an 
effectual  increase;  in  that  the  market  value  of  the 
securities  outstanding  would  be  larger  after  the  op- 
eration than  the  value  of  the  aggregate  capital  of  the 
underlying  corporations  had  been  before.  There 
has  commonly  been  some  gain  in  aggregate  capital- 
isation, and  the  resulting  increased  capitalisation  has 
also  commonly  proved  to  be  valid.  The  market 
value  of  the  larger  and  more  stable  capitalisation 
has  presently  proved  to  be  larger  and  more  stable 
than  the  capitalisation  of  the  same  properties  under 


THE  VESTED  INTERESTS         109 

the  earlier  regime  of  divided  ownership  and  control. 
What  has  so  been  added  to  the  aggregate  capitalisa- 
tion has  in  the  main  been  the  relative  absence  of 
work  at  cross  purposes,  which  has  resulted  from  the 
consolidation  of  ownership;  and  it  is  to  be  accounted 
a  typical  instance  of  intangible  assets.  The  new  and 
larger  capitalisation  has  commonly  made  good;  and 
this  is  particularly  true  for  those  later,  larger  and 
more  conclusive  recombinations  of  corporate  owner- 
ship with  which  the  so-called  era  of  trust-making  in 
the  steel  business  came  to  a  provisional  conclusion. 
The  U.  S.  Steel  Corporation  has  vindicated  the  wis- 
dom of  an  unreserved  advance  on  lines  of  consolida- 
tion and  recapitalisation  in  the  financing  of  the  large 
and  technical  industries. 

For  reasons  well  understood  by  those  who  are  ac- 
quainted with  these  things,  no  one  can  offer  a 
confident  estimate,  or  even  a  particularly  intelligent 
opinion,  as  to  the  aggregate  amount  of  overhead 
burden  and  intangible  assets  which  has  been  written 
into  the  corporate  capital  of  the  steel  business  in 
the  course  of  a  few  years  of  consolidation.  For 
reasons  of  depreciation,  disuse,  replacement,  exten- 
sion, renewal,  changes  in  market  conditions  and  in 
technical  requirements,  the  case  is  too  intricate  to 
admit  anything  like  a  clear-cut  identification  of  the 
immaterial  items  included  in  the  capitalisation.  But 
there  is  no  chance  to  doubt  that  in  the  aggregate 
these  immaterial  items  foot  up  to  a  very  formidable 
proportion  of  the  total  capital. 

And  what  is  true  for  the  steel  business  in  this  re- 
spect will  doubtless  apply  even  more  unreservedly  in 
transportation,  or  in  such  a  case  as  the  oil  business. 


no          THE  VESTED  INTERESTS 

The  latter  may  be  taken  as  a  typical  case,  differing 
from  steel  in  some  of  the  circumstances  which  condi- 
tion its  business  organisation,  but  comparable  with 
steel  in  respect  of  the  necessity  for  a  centralised  con- 
trol. In  the  oil  business  a  rough  classification  of 
assets  would  take  some  such  shape  as  this:  (a) 
Monopolisation  of  natural  resources,  (b)  Control 
of  markets  by  limitation  of  the  supply,  (c)  Plant. 
Of  these  three,  the  last  named,  the  material  equip- 
ment, would  unquestionably  be  found  to  be  altogether 
the  slightest  and  least  valuable.  What  is  not  doubt- 
ful, in  the  steel  business  or  in  any  of  the  other  in- 
dustrial enterprises  that  run  on  a  similar  scale  and 
a  similar  level  of  technology,  is  that  the  owners  of 
the  corporate  capital  have  come  in  for  a  very  sub- 
stantial body  of  intangible  assets  of  this  kind,  and 
that  these  assets  of  capitalised  free  income  will  foot 
up  to  several  times  the  total  value  of  the  material 
assets  which  underlie  them. 

It  is  evident  that  the  businesslike  management  of 
industry  under  these  conditions  need  not  involve  de- 
rangement and  cross  purposes  at  every  turn.  It 
should  always  be  likely  that  the  business  men  in 
charge  will  find  it  to  their  profit  to  combine  forces, 
eliminate  wasteful  traffic,  allow  a  reasonably  free 
and  economical  working  of  the  country's  productive 
powers  within  the  limits  of  a  profitable  price,  and  so 
come  in  for  a  larger  total  of  free  income  to  be  di- 
vided amicably  among  themselves  on  a  concerted 
plan.  This  can  be  done  by  means  of  a  combination 
of  ownership,  such  as  the  corporations  of  the  pres- 
ent time.  But  there  is  a  difficulty  of  principle  in- 
volved in  this  use  of  incorporation  as  a  method  of 


THE  VESTED  INTERESTS          in 

combining  forces.  Such  a  consolidation  of  owner- 
ship and  control  on  a  large  scale  appears  to  be,  in 
effect,  a  combination  of  forces  against  the  rest  of  the 
community  or  in  contravention  of  the  principles  of 
free  competition.  In  effect  it  foots  up  to  the  same 
thing  as  a  combination  in  restraint  of  trade;  in  form 
it  is  a  concentration  of  ownership.  Combination  of 
owners  in  restraint  of  trade  is  obnoxious  to  the  lib- 
eral principles  of  free  bargaining  and  self-help; 
consolidation  of  ownership  by  purchase  or  incorpora- 
tion appears  to  be  a  reasonable  exercise  of  the  right 
of  free  bargaining  and  self-help.  There  is  accord- 
ingly some  chance  of  a  difference  of  opinion  at  this 
point  and  some  risk  of  playing  fast  and  loose  with 
these  liberal  principles  that  disallow  conspiracy  in 
restraint  of  trade.  This  difficulty  .of  principle  has 
been  sought  to  be  got  over  by  believing  that  a  com- 
bination of  ownership  in  restraint  of  trade  does  not 
amount  to  a  conspiracy  in  restraint  of  trade,  within 
the  purport  of  these  liberal  principles.  There  is  a 
great  and  pressing  need  of  such  a  construction  of 
these  principles,  which  would  greatly  facilitate  the 
work  of  corporation  finance;  but  it  is  to  be  admitted 
that  some  slight  cloud  still  rests  on  this  manner  of 
disposing  of  ownership.  It  involves  abdication  or 
delegation  of  that  discretionary  exercise  of  property 
rights  which  has  been  held  to  be  of  the  essence  of 
ownership. 

The  new  state  of  things  brought  about  by  such  a 
consolidation  is  capitalised  as  a  permanent  source 
of  free  income.  And  if  it  proves  to  be  a  sound  busi- 
ness proposition  the  new  capitalisation  will  measure 
the  increase  of  income  which  goes  to  its  promoter  or 


ii,2          THE  VESTED  INTERESTS 

to  the  corporation  in  whose  name  the  move  has  been 
made;  and  if  the  work  is  well  and  neatly  done,  no 
one  else  will  get  any  gain  from  it  or  be  in  any  way 
benefited  by  the  arrangement.  It  is  a  business 
proposition,  not  a  fanciful  project  of  public  utility. 
The  capitalised  value  of  such  a  coalition  of  owner- 
ship is  not  measured  by  any  heightened  production 
or  any  retrenchment  of  waste  that  may  come  in  its 
train,  nor  need  the  new  move  bring  any  saving  or 
any  addition  to  the  community's  net  productive  re- 
sources in  any  respect.  Indeed,  it  happens  not  in- 
frequently that  such  a  waste-conserving  coalition  of 
ownership  leads  directly  to  a  restriction  of  output, 
according  to  the  familiar  run  of  monopoly  rule.  So 
frequently  will  restriction,  enhanced  prices,  unem- 
ployment, and  hardship  follow  in  such  a  case,  that  it 
has  come  to  be  an  article  of  popular  knowledge  and 
belief  that  this  is  the  logical  aim  and  outcome  of 
any  successful  manoeuvre  of  the  kind. 

So  also,  though  its  output  of  marketable  goods  or 
services  may  be  got  on  easier  terms,  the  new  and 
larger  business  concern  which  results  from  the  co- 
alition need  be  no  more  open-handed  or  humane  in 
its  dealings  with  its  workmen.  There  will,  in  fact, 
be  some  provocation  to  the  contrary.  A  more  pow- 
erful corporation  is  in  a  position  to  make  its  own 
terms  with  greater  freedom,  which  it  then  is  for  the 
workmen  to  take  or  leave,  but  ordinarily  to  take;  for 
the  universal  rule  of  businesslike  management  —  to 
charge  what  the  traffic  will  bear  —  continues  to  hold 
unbroken  for  any  business  concern,  irrespective  of 
its  size  or  its  facilities.  As  has  already  been  noted 
in  an  earlier  passage,  charging  what  the  traffic  will 


THE  VESTED  INTERESTS          113 

bear  is  the  same  as  charging  what  will  yield  the 
largest  net  profit. 

There  stand  over  two  main  questions  touching  the 
nature  and  uses  of  these  vested  interests :  —  Why 
do  not  these  powerful  business  concerns  exercise 
their  autocratic  powers  to  drive  the  industrial  system 
at  its  full  productive  capacity,  seeing  that  they  are 
in  a  position  to  claim  any  increase  of  net  production 
over  cost?  and,  What  use  is  made  of  the  free  income 
which  goes  to  them  as  the  perquisite  of  their 
vested  interest?  The  answer  to  the  former  ques- 
tion is  to  be  found  in  the  fact  that  the  great  busi- 
ness concerns  as  well  as  the  smaller  ones  are  all 
bound  by  the  limitations  of  the  price  system,  which 
holds  them  to  the  pursuit  of  a  profitable  price,  not 
to  the  pursuit  of  gain  in  terms  of  material  goods. 
Their  vested  rights  are  for  the  most  part  carried  as 
an  overhead  charge  in  terms  of  price  and  have  to  be 
met  in  those  terms,  which  will  not  allow  an  increase 
of  net  production  regardless  of  price.  The  latter 
question  will  find  its  answer  in  the  well-known 
formula  of  the  economists,  that  "  human  wants  are 
indefinitely  extensible,"  particularly  as  regards  the 
consumption  of  superfluities.  The  free  income 
which  is  capitalised  in  the  intangible  assets  of  the 
vested  interests  goes  to  support  the  well-to-do  in- 
vestors, who  are  for  this  reason  called  the  kept 
classes,  and  whose  keep  consists  in  an  indefinitely 
extensible  consumption  of  superfluities. 


VI 

THE   DIVINE   RIGHT   OF   NATIONS 

THIS  sinister  fact  is  patent,  that  the  great  war  has 
arisen  out  of  a  fateful  entanglement  of  national  pre- 
tensions. And  it  is  a  fact  scarcely  less  patent  that 
this  fateful  status  quo  ante  arose  out  of  the  ordinary 
run  of  that  system  of  law  and  custom  which  has 
governed  human  intercourse  among  civilised  nations 
in  our  time.  The  underlying  principles  of  this  sys- 
tem of  law  and  custom  have  continued  to  govern  hu- 
man intercourse  under  a  new  order  of  material  cir- 
cumstances which  has  come  into  effect  since  these  prin- 
ciples were  first  installed.  These  enlightened  prin- 
ciples that  go  to  make  up  the  modern  point  of  view 
as  regards  law  and  morals  are  of  the  eighteenth 
century,  whereas  the  new  order  in  industry  is  of  the 
twentieth,  and  between  these  two  dates  lies  an  in- 
terval of  unexampled  change  in  the  material  condi- 
tions of  life. 

To  all  this  it  will  be  said,  of  course,  that  warfare 
is  not  a  new  invention,  and  that  the  national  ambi- 
tions and  animosities  out  of  which  wars  have  always 
arisen  are  of  older  date  than  the  modern  point  of 
view  and  the  machine  industry;  but  it  will  also  not 
be  denied  that  the  great  war  which  is  now  coming  to 
a  provisional  close  is  the  largest  and  most  atrocious 
epoch  of  warfare  known  to  history,  and  that  it  has, 
in  point  of  fact,  arisen  out  of  this  status  quo  which 

114 


THE  DIVINE  RIGHT  OF  NATIONS     115 

has  been  created  by  these  enlightened  principles  of 
the  modern  point  of  view  in  working  out  their  con- 
sequences on  the  ground  of  the  new  order  of  in- 
dustry. 

The  great  war  arose  within  that  group  of  nations 
which  have  the  full  use  of  the  industrial  arts,  which 
conduct  their  business  and  control  their  industries 
on  the  lines  of  these  enlightened  principles  of  the 
eighteenth  century,  and  whose  national  ambitions 
and  policies  are  guided  by  the  preconceptions  of 
national  self-determination  and  self-assertion  which 
these  modern  civilised  peoples  have  habitually  found 
to  be  good  and  valid.  The  group  of  belligerents 
has  included  primarily  the  great  industrial  nations, 
and  the  outcome  of  the  war  is  being  decided  by  the 
industrial  superiority  of  the  advanced  industrial  peo- 
ples. A  host  of  slightly  backward  peoples  —  back- 
ward in  the  industrial  respect  —  have  been  drawn 
into  this  contest  of  the  great  powers,  but  these  have 
taken  part  only  as  interested  outliers  and  as  auxil- 
iaries to  be  drawn  on  at  the  discretion  of  the  chief 
belligerents.  It  has  been  a  contest  of  technological 
superiority  and  industrial  resources,  and  in  the  end 
the  decision  of  it  rests  with  the  greater  aggregation 
of  industrial  forces.  Frightfulness  and  warlike 
abandon  and  all  the  beastly  devices  of  the  heathen 
have  proved  to  be  unavailing  against  the  great  in- 
dustrial powers;  partly  because  these  things  do  not 
enduringly  serve  the  technological  needs  of  the  con- 
test, partly  because  they  have  run  counter  to  that 
massive  drift  of  sentiment  which  animates  the  great 
industrial  peoples. 


n6          THE  VESTED  INTERESTS 

The  center  of  the  warlike  disturbance  has  been 
the  same  as  the  center  of  growth  and  diffusion  of  the 
new  order  of  industry.  And  in  both  respects,  both 
as  regards  participation  in  the  war  and  as  regards 
their  share  in  the  new  order  of  industry,  it  is  not  a 
question  of  geographical  nearness  to  a  geographical 
center,  but  of  industrial  affiliation  and  technological 
maturity.  The  center  of  disturbance  and  participa- 
tion is  a  center  in  the  technological  respect;  and  in 
the  end  the  battle  goes  to  those  few  great  industrial 
peoples  who  are  nearest,  technologically  speaking, 
to  the  apex  of  growth  of  the  new  order.  These 
need  be  superior  in  no  other  respect;  the  contest  is 
decided  on  the  merits  of  the  industrial  arts.  And 
in  this  connection  it  may  be  in  place  to  call  to  mind 
again  that  the  state  of  the  industrial  arts  is  always 
a  joint  stock  of  knowledge  and  proficiency  held,  ex- 
ercised, augmented  and  carried  forward  by  the  in- 
dustrial community  at  large  as  a  going  concern. 
What  the  war  has  vindicated,  hitherto,  is  the  great 
efficiency  of  the  mechanical  industry. 

But  the  ambitions  and  animosities  which  precipi- 
tated this  contest,  and  which  now  stand  ready  to 
bring  on  a  renewal  of  it  in  due  time,  are  not  of  the 
industrial  order,  and  eminently  not  of  the  new  order 
of  technology.  They  have  been  more  nearly  bound 
up  with  those  principles  of  self-help  that  have  stood 
over  from  the  recent  past,  from  the  time  before  the 
new  order  of  industry  came  into  bearing.  And  there 
is  a  curious  parallel  between  the  consequences  worked 
out  by  these  principles  in  the  economic  system  within 
each  of  these  nations,  on  the  one  hand,  and  in  the 
concert  of  nations,  on  the  other  hand.  Within  the 


THE  DIVINE  RIGHT  OF  NATIONS     117 

nation  the  enlightened  principles  of  self-help  and 
free  contract  have  given  rise  to  vested  interests 
which  control  the  industrial  system  for  their  own 
use  and  thereby  come  in  for  a  legal  right  to  the 
community's  net  output  of  product  over  cost.  Each 
of  these  vested  interests  habitually  aims  to  take  over 
as  much  as  it  can  of  the  lucrative  traffic  that  goes  on 
and  to  get  as  much  as  it  can  out  of  the  traffic,  at  the 
cost  of  the  rest  of  the  community.  After  the  same 
analogy,  and  by  sanction  of  the  same  liberal  prin- 
ciples, the  civilised  nations,  each  and  several,  are 
vested  with  an  inalienable  right  of  "  self-determina- 
tion"; which  being  interpreted  means  the  self-ag- 
grandisement of  each  and  several  at  the  cost  of  the 
rest,  by  a  reasonable  use  of  force  and  fraud.  And 
there  has  been,  on  the  whole,  no  sense  of  shame  or 
of  moral  obliquity  attaching  to  the  use  of  so  much 
force  and  fraud  as  the  traffic  would  bear,  in  this 
national  enterprise  of  self-aggrandisement.  Such 
has  been  use  and  wont  among  the  civilised  nations. 
Meantime  the  new  order  of  industry  has  come  into 
bearing,  with  the  result  that  any  disturbance  which 
is  set  afoot  by  any  one  of  these  self-determining  na- 
tions in  pursuing  its  own  ends  is  sure  to  derange 
the  conditions  of  life  for  all  the  others,  just  so  far  as 
these  others  are  bound  up  in  the  same  comprehen- 
sive organization  of  trade  and  industry.  Full  and 
free  self-determination  runs  counter  to  the  rule  of 
Live  and  let  live.  After  the  same  fashion  the  busi- 
nesslike manoeuvres  of  the  vested  interests  within 
the  nations,  each  managing  its  own  affairs  with  an 
eye  single  to  its  own  advantage,  deranges  the  or- 
dinary conditions  of  life  for  the  common  man,  and 


ii8          THE  VESTED  INTERESTS 

violates  the  rule  of  Live  and  let  live  by  that  much. 
Self-determination,  full  and  free,  necessarily  en- 
croaches on  the  conditions  of  life  for  all  the  others. 

So,  just  now  there  is  talk  of  disallowing  or  abridg- 
ing the  inalienable  right  of  free  nations  by  so  much 
as  is  imperatively  demanded  for  reasonably  secure 
conditions  of  life  among  these  civilised  peoples,  and 
especially  so  far  as  is  required  for  the  orderly  pur- 
suit of  profitable  business  by  the  many  vested  inter- 
ests domiciled  in  these  civilised  countries.  The  pro- 
ject has  much  in  common  with  the  measures  which 
have  been  entertained  for  the  restraint  of  any  in- 
sufferably extortionate  vested  interests  within  the 
national  frontiers. 

In  both  cases  alike,  both  in  the  proposed  regula- 
tion of  businesslike  excesses  at  home  and  in  the  pro- 
posed league  of  pacific  nations,  the  projected  meas- 
ures of  sobriety  and  tolerance  appear  to  be  an  infrac- 
tion of  that  inalienable  right  of  self-direction  that 
makes  up  the  substantial  core  of  law  and  custom  ac- 
cording to  the  modern  point  of  view.  There  is 
much  alarm  felt  by  the  demagogues  at  the  danger 
which  is  said  to  threaten  the  national  "  sover- 
eignty ";  just  as  the  vested  interests  are  volubly  ap- 
prehensive of  the  "  sacred  rights  of  property." 
And  in  both  cases  alike  the  projected  measure  of 
sobriety,  tolerance  and  incidental  infraction  are  de- 
signed to  go  no  farther  than  is  unequivocally  de- 
manded by  the  imperative  needs  of  continued  life  on 
earth;  leaving  the  benefit  of  the  doubt  always  on  the 
side  of  the  insufferable  vested  interests  or  the  mis- 
chievous national  ambitions,  as  the  case  may  be; 
and  leaving  the  impression  that  it  all  is  a  concessive 


THE  DIVINE  RIGHT  OF  NATIONS     119 

surrender  of  principles  under  compulsion  of  circum- 
stances that  will  not  wait.  There  is  also  in  both 
cases  alike  a  well-assured  likelihood  that  the  tenta- 
tive revision  of  vested  interests  and  of  national  pre- 
tensions is  to  be  no  more  than  an  incompetent  re- 
medial precaution,  a  makeshift  shelter  from  the 
wrath  to  come. 

It  is  evident  that  in  both  cases  alike  we  have  to 
do  with  an  incursion  of  ideas  and  considerations  that 
are  alien  to  the  established  liberal  principles  of  hu- 
man intercourse;  but  it  is  also  evident  that  these 
ideas  and  considerations  have  the  sanction  of  that 
new  order  of  things  that  runs  in  terms  of  tangible 
performance  and  enforces  its  requisitions  with  cruel 
and  unusual  punishments.  It  is  these  punishments 
that  are  to  be  evaded  or  suspended,  and  immunity  is 
sought  by  diplomatic  measures  of  formality  and  de- 
lay rather  than  by  tangible  performance.  In  such  a 
case  the  keepers  of  the  established  order  will  always 
look  to  evasion  and  entertain  a  hope  of  avoiding 
casualties  and  holding  the  line  by  the  use  of  a  clev- 
erly designed  masquerade. 

It  is  the  express  purpose  of  the  projected  league  of 
pacific  nations  to  keep  the  sovereign  rights  of  na- 
tional self-determination  intact  for  all  comers;  it  is 
to  be  a  league  of  nations,  not  a  league  of  peoples. 
But  it  should  be  sufficiently  obvious,  whether  it  is 
avowed  or  not,  that  these  sovereign  rights  can  be 
maintained  by  these  means  only  in  a  mutilated  form. 
Within  the  framework  of  any  such  league  or  com- 
mon understanding  the  nations,  each  and  several, 
can  continue  to  exercise  these  rights  only  on  the 
basis  of  a  mutual  agreement  to  give  up  so  much  of 


120          THE  VESTED  INTERESTS 

their  national  pretensions  as  are  patently  incom- 
patible with  the  common  good.  It  involves  a  con- 
cessive surrender  of  the  sovereign  right  of  self-ag- 
grandisement, and  perhaps  also  an  extension  of  the 
rule  of  Live  and  let  live  to  cover  minor  nationalities 
within  the  national  frontiers;  a  mutual  agreement  to 
play  fair  under  the  new  rules  that  are  to  govern  the 
conduct  of  national  enterprise.  Any  injunction  to 
play  fair  is  an  infraction  of  national  sovereignty. 
Hitherto  no  liberal  statesman  has  been  so  audacious 
as  to  "  imagine  the  king's  death  "  and  lay  profane 
hands  on  the  divine  right  of  nations  to  seek  their 
own  advantage  at  the  cost  of  the  rejst  by  such  means 
as  the  rule  of  reason  shall  decide  to  be  permissible. 
It  is  only  that  licence  is  to  be  hedged  about,  and  all 
insufferable  superfluity  d€  naughtiness  is  provision- 
ally to  be  disallowed. 

There  is  this  evident  resemblance  and  kinship  be- 
tween the  vested  interests  of  business  and  the  sov- 
ereign rights  of  nations,  but  it  does  not  amount  to 
identity.  There  is  always  something  more  to  the 
national  sovereignty  and  the  national  pretensions; 
although  these  precautionary  measures  that  are  now 
under  advisement  as  touches  the  legitimate  bounds 
of  both  do  fun  on  singularly  similar  lines  and  are  of 
a  similarly  tentative  and  equivocal  nature.  In  the 
prudent  measures  by  which  statesmen  have  set  them- 
selves to  curb  the  excesses  of  the  greater  vested  in- 
terests within  the  nation  their  aim  has  quite  con- 
sistently been  to  guard  the  free  income  of  the  lesser 
vested  interests  against  the  unseasonable  rapacity  of 
the  greater  ones;  all  the  while  that  the  underlying 
community  has  come  into  the  case  only  as  a  fair  field 


THE  DIVINE  RIGHT  OF  NATIONS     121 

of  business  enterprise  at  large,  within  which  there 
is  to  be  maintained  a  reasonable  degree  of  equal  op- 
portunity among  these  interests,  big  and  little,  in 
whom,  one  with  another,  vests  the  effectual  usufruct 
of  the  underlying  community. 

It  may  be  necessary  to  remark,  by  way  of  paren- 
thesis, that  while  this  description  of  these  corrective 
measures  may  seem  to  hint  at  a  fault,  that  is  by  no 
means  its  purpose.  The  fault  may  be  there,  of 
course,  but  if  so  it  has  no  bearing  on  the  argument 
at  this  point.  It  should  also  be  remarked  in  the 
same  connection  that  this  description  of  facts  does 
not  overlook  the  well-conceived  verbal  reservations 
and  preambles  with  which  cautious  statesmen  habitu- 
ally surround  the  common  good  in  the  face  of  any 
unseasonable  rapacity  on  the  part  of  the  greater 
vested  interests;  it  is  only  that  the  run  of  the  facts 
has  been  quite  patently  to  the  effect  so  indicated.  In 
the  same  connection  it  may  also  not  be  out  of  place 
to  recall  that  a  vested  interest  is  a  prescriptive  right 
to  get  something  for  nothing;  in  which  again  the 
kinship  and  resemblance  between  vested  interests  in 
business  and  the  sovereign  rights  of  nations  comes 
into  view. 

So,  on  the  other  hand,  the  great  war  has  brought 
into  a  strong  light  the  obvious  fact  that,  given  the 
existing  state  of  the  industrial  arts,  any  unseasonable 
rapacity  on  the  part  of  the  great  Powers  in  exer- 
cising their  inalienable  right  of  national  self-deter- 
mination will  effectually  suppress  the  similarly  in- 
alienable right  of  self-determination  in  any  minor 
nationality  that  gets  in  the  way.  All  of  which  is 
obnoxious  to  the  liberal  principle  of  self-help  or  to 


122          THE  VESTED  INTERESTS 

that  of  equal  opportunity.  Unhappily,  these  two 
guiding  principles  of  the  modern  point  of  view  — 
self-help  and  equal  opportunity  —  have  proved  to 
be  incompatible  with  one  another  under  the  circum- 
stances of  the  new  order  of  things.  So  there  has 
come  into  view  this  project  of  a  league,  by  which  it 
is  proposed  to  play  fast  and  loose  with  the  inalien- 
able right  of  national  self-help  by  setting  up  some 
sort  of  a  collusive  arrangement  between  the  Powers, 
a  conspiracy  in  restraint  of  national  intrigue,  look- 
ing to  a  reasonable  disallowance  of  force  and  fraud 
in  the  pursuit  of  national  ambitions. 

Under  the  material  circumstances  of  the  new  or- 
der those  correctives  that  were  once  counted  on  to 
keep  the  run  of  things  within  the  margin  of  toler- 
ance have  ceased  to  be  a  sufficient  safeguard.  By 
use  and  wont,  in  the  Liberal  scheme  of  statecraft  as 
well  as  in  the  scheme  of  freely  competitive  business, 
implicit  faith  has  hitherto  been  given  to  the  re- 
medial effect  of  punitive  competition  and  the  punitive 
correction  of  excesses  by  law  and  custom.  It  has 
been  a  system  of  adjustment  by  punitive  after- 
thought. All  of  which  may  once  have  been  well 
enough  in  its  time,  so  long  as  the  rate  and  scale  of 
the  movement  of  things  were  slow  enough  and  small 
enough  to  be  effectually  overtaken  and  set  to  rights 
by  afterthought.  The  modern  —  eighteenth-century 
—  point  of  view  presumes  an  order  of  things  which 
is  amenable  to  remedial  adjustment  after  the  event. 
But  the  new  order  of  industry,  and  that  sweeping 
equilibrium  of  material  forces  that  embodies  the  new 
order,  is  not  amenable  to  afterthought.  Where  hu- 
man life  and  human  fortunes  are  exposed  to  the 


THE  DIVINE  RIGHT  OF  NATIONS     123 

swing  of  the  machine  system,  or  to  the  onset  of  na- 
tional ambitions  that  are  served  by  the  machine  in- 
dustry, it  is  safety  first  or  none.  However,  ripe 
statesmen  and  over-ripe  captains  of  finance  have  so 
secure  a  grasp  of  first  principles  that  they  are  still 
able  to  believe  quite  sincerely  in  the  good  old  plan 
of  remedial  afterthought,  and  it  still  commands  the 
affectionate  service  of  the  jurists  and  the  diplomatic 
corps.  Meantime  the  far-reaching,  swift-moving, 
wide-sweeping  machine  technology  has  been  drawn 
into  the  service  of  national  pretensions,  as  well  as  of 
the  vested  interests  that  find  shelter  under  the  na- 
tional pretensions,  and  both  the  remedial  diplomats 
and  the  self-determination  of  nations  are  on  the  way 
to  become  a  tale  that  was  told. 

The  divine  right  of  nations  appears  to  be  a 
blurred  after-image  of  the  divine  rights  of  kings. 
It  rests  on  ground  more  archaic  and  less  open  to 
scrutiny  than  the  Natural  Right  of  self-direction  as 
it  applies  in  the  case  of  individual  persons.  It  is  a 
highly  prized  national  asset,  in  the  nature  of  an  im- 
ponderable; and,  very  much  as  is  true  of  the  divine 
right  of  kings,  any  spoken  doubt  of  its  paramount 
validity  comes  near  being  a  sin  against  the  Holy 
Ghost.  It  can  not  safely  be  scrutinised  or  defined  in 
matter-of-fact  words.  As  is  true  of  the  divine  right 
of  kings,  so  also  as  regards  the  divine  right  of  na- 
tions, it  is  extremely  difficult  to  show  that  it  serves 
the  common  good  in  any  material  way,  in  any  way 
that  can  be  formulated  or  verified  in  terms  of  tan- 
gible performance.  Evidently  it  does  not  come  in 
under  that  mechanistic  conception  that  rules  the 


124          THE  VESTED  INTERESTS 

scheme  of  knowledge  and  belief  wherever  and  so 
far  as  material  science  and  the  machine  technology 
have  reshaped  men's  habits  of  thought.  Indeed,  it 
is  not  a  technological  conception,  late  or  early.  It 
is  not  statable  in  terms  of  mechanical  efficiency,  or 
even  in  terms  of  price.  Hence  it  is  spoken  of,  often 
and  eloquently,  as  being  "  beyond  price."  It  is  more 
nearly  akin  to  magic  and  religion.  It  should  per- 
haps best  be  conceived  as  an  end  in  itself,  or  a  thing- 
in-itself  —  again  in  close  analogy  with  the  divine 
right  of  kings.  But  there  is  no  question  of  its  sub- 
stantial reality  and  its  paramount  efficacy  for  good 
and  ill. 

The  divine  —  that  is  to  say  inscrutable  and  irre- 
sponsible —  right  of  kings  reached  its  best  estate 
and  put  on  divinity  in  the  stirring  times  of  the  Era 
of  State-making;  when  the  princes  and  prelates  "  tore 
each  other  in  the  slime."  It  was  of  a  proprietary 
nature,  a  vested  interest,  something  in  the  nature  of 
intangible  assets  which  embodied  the  usufruct  of  the 
realm,  including  its  population  and  resources,  and 
which  could  be  turned  to  account  in  the  pursuit  of 
princely  or  dynastic  advantages  at  home  and  abroad. 
This  divine  right  of  princes  was  disallowed  among 
the  more  civilised  peoples  on  the  transition  to  mod- 
ern ways  of  thinking,  and  the  sovereign  rights  of  the 
prince  were  then  taken  over  —  at  "least  in  form  and 
principle  —  by  the  people  at  large,  and  they  have 
continued  to  be  held  by  them  as  some  sort  of  im- 
ponderable "  community  property," —  at  least  in 
point  of  form  and  profession.  The  vested  interest 
of  the  prince  or  the  dynasty  in  the  usufruct  of  the 
underlying  community  is  thereby  presumed  to  have 


THE  DIVINE  RIGHT  OF  NATIONS     125 

become  a  collective  interest  vested  in  the  people 
of  the  nations  and  giving  them  a  "  right  of  user  " 
in  their  own  persons,  knowledge,  skill  and  resources. 

The  mantle  of  princely  sovereignty  has  fallen  on 
the  common  man  —  formally  and  according  to  the 
letter  of  the  legal  instruments.  In  practical  effect, 
as  "  democratic  sovereignty  "  it  has  been  converted 
into  a  cloak  to  cover  the  nakedness  of  a  government 
which  does  business  for  the  kept  classes.  In  prac- 
tical effect,  the  shift  from  the  dynastic  politics  of  the 
era  of  state-making  to  the  Liberal  policies  based  on 
the  enlightened  principles  of  the  eighteenth  century 
has  been  a  shift  from  the  pursuit  of  princely  domin- 
ion to  an  imperialistic  enterprise  for  the  protection 
and  furtherance  of  those  vested  interests  that  are 
domiciled  within  the  national  frontiers.  That  such 
has  been  the  practical  outcome  is  due  to  the  fact  that 
these  enlightened  principles  of  the  eighteenth  cen- 
tury comprise  as  their  chief  article  the  "  natural  " 
right  of  ownership.  The  later  course  of  events  has 
decided  that  the  ownership  of  property  in  sufficiently 
large  blocks  will  control  the  country's  industrial  sys- 
tem and  thereby  take  over  the  disposal  of  the  com- 
munity's net  output  of  product  over  cost;  on  which 
the  vested  interests  live  and  on  which,  therefore,  the 
kept  classes  feed.  Hence  the  chief  concern  of  those 
gentlemanly  national  governments  that  have  dis- 
placed the  dynastic  states  is  always  and  consistently 
the  maintenance  of  the  rights  of  ownership  and  in- 
vestment. 

However,  these  pecuniary  interests  of  investment 
and  free  income  are  not  all  that  is  covered  by  the 
mantle  of  democratic  sovereignty.  Nor  will  it  hold 


126          THE  VESTED  INTERESTS 

true  that  the  common  man  has  no  share  in  the  legacy 
of  sovereignty  and  national  enterprise  which  the  en- 
lightened democratic  commonwealth  has  taken  over 
from  the  departed  dynastic  regime.  The  divine 
right  of  the  prince  included  certain  imponderables,  as 
well  as  the  usufruct  of  the  material  resources  of  the 
realm.  There  were  the  princely  dignity  and  honor, 
which  were  no  less  substantial  an  object  of  value  and 
ambition  and  were  no  less  tenaciously  held  by  the 
princes  of  the  dynastic  regime  than  the  revenues  and 
material  "  sinews  of  war  "  on  which  the  prestige 
and  honor  rested.  And  the  common  man  of  the 
democratic  commonwealth  has  at  least  come  in  for 
a  ratable  share  in  these  imponderables  of  prestige 
and  honor  that  so  are  comprised  under  the  divine 
right  of  the  nation.  He  has  an  undivided  interest 
in  the  glamour  of  national  achievement,  and  he  can 
swell  with  just  pride  in  contemplating  the  triumphs 
of  his  gentlemanly  government  over  the  vested  in- 
terests domiciled  in  any  foreign  land,  or  with  just 
indignation  at  any  diplomatic  setback  suffered  by  the 
vested  interests  domiciled  in  his  own. 

There  is  also  a  more  tangible,  though  more  petty, 
advantage  gained  for  the  common  man  in  having 
formally  taken  over  the  sovereignty  from  the  dead 
hand  of  the  dynastic  prince.  The  common  man  be- 
ing now  vested  with  the  divine  right  of  national  sov- 
ereignty, held  in  undivided  community  ownership,  it 
is  ceremonially  necessary  for  the  gentlemanly  stew- 
ards of  the  kept  classes  to  consult  the  wishes  of  this 
their  sovereign  on  any  matters  of  policy  that  can  not 
wholly  be  carried  through  in  a  diplomatic  corner 
and  under  cover  of  night  and  cloud.  He,  collect- 


THE  DIVINE  RIGHT  OF  NATIONS     127 

ively,  holds  an  eventual  power  of  veto.  And  this 
power  of  veto  has  in  practice  been  found  to  be  some- 
thing of  a  safeguard  against  any  universal  and  en- 
during increase  of  hardship  at  the  hands  of  the  gen- 
tlemen-investors to  whom  the  conduct  of  the  nation's 
affairs  has  been  "  entrusted;  "  a  very  modest  safe- 
guard, it  is  true,  but  always  of  some  eventual  con- 
sequence. There  is  the  difference  that  in  the  demo- 
cratic commonwealth  the  common  man  has  to  be 
managed  rather  than  driven, —  except  for  minor 
groups  of  common  men  who  live  on  the  lower-com- 
mon levels,  and  except  for  recurrent  periods  of  legis- 
lative hysteria  and  judiciary  blind-staggers.  And  it 
is  pleasanter  to  be  managed  than  to  be  driven. 
Chicane  is  a  more  humane  art  than  corporal  pun- 
ishment. Imperial  England  is,  after  all,  a  milder- 
mannered  stepmother  than  Imperial  Germany. 
And  always  the  common  man  comes  in  for  his  rat- 
able share  in  the  glamour  of  national  achievement, 
in  war  and  peace;  and  this  imponderable  gain  of  the 
spirit  is  also  something.  The  value  of  these  col- 
lective imponderables  of  national  prestige  and  col- 
lective honor  is  not  to  be  made  light  of.  These 
count  for  very  much  in  the  drift  and  set  of  national 
sentiment,  and  moral  issues  of  national  moment  are 
wont  to  arise  out  of  them.  Indeed,  they  constitute 
the  chief  incentive  which  holds  the  common  man  to 
an  unrepining  constancy  in  the  service  of  the  "  na- 
tional interests."  So  that,  while  the  tangible  shell 
of  material  gain  appears  to  have  fallen  to  the  demo- 
cratic community's  kept  classes,  yet  the  "  psychic 
income  "  that  springs  from  national  enterprise,  the 
spiritual  kernel  of  national  elation  they  share  with 


128          THE  VESTED  INTERESTS 

the  common  man  on  an  equitable  footing  of  com- 
munity interest. 

The  vested  rights  of  the  nation  are  of  the  essence 
of  that  order  of  things  which  enjoys  the  unqualified 
sanction  of  the  modern  point  of  view.  Like  any 
other  vested  interest,  these  rights  are  conceived  in 
other  terms  than  those  which  are  native  to  the  new 
order  of  material  science  and  technology.  They 
are  of  an  older  and  more  spiritual  order,  so  far  as 
regards  the  principles  of  knowledge  and  belief  on 
which  they  rest.  But  whatever  may  be  their  re- 
moter pedigree,  they  have  the  sanction  of  that  body 
of  principles  that  is  called  the  modern  point  of  view, 
and  they  belong  in  the  scheme  of  things  handed  on 
by  the  S5beral  movement  of  the  eighteenth  and  nine- 
teenth century.  Apart  from  the  imponderable  val- 
ues which  fall  under  the  head  of  national  prestige, 
these  vested  rights  of  the  nation  can  be  defined  as 
an  extension  to  the  commonwealth  of  the  same 
natural  rights  of  self-direction  and  personal  security 
—  free  contract  and  self-help  —  that  are  secured  to 
the  individual  citizen  under  the  common  law. 

Yet,  while  the  national  policies  of  the  democratic 
commonwealths  are  managed  by  Liberal  statesmen 
in  behalf  of  the  vested  interests,  they  still  run  on 
the  ancient  lines  of  dynastic  statecraft,  as  worked 
out  by  the  statesmen  of  the  ancient  regime;  and  the 
common  man  is  still  passably  content  to  see  the  traf- 
fic run  along  on  those  lines.  The  things  which  are 
considered  desirable  to  be  done  in  the  way  of  na- 
tional enterprise,  as  well  as  the  sufficient  reasons 
for  doing  them,  still  have  much  of  the  medieval 
color.  National  pretensions,  enterprise,  rivalry,  in- 


THE  DIVINE  RIGHT  OF  NATIONS     129 

trigue  and  dissensions  among  the  democratic  com- 
monwealths are  still  such  as  would  have  been  in- 
telligible to  Macchiavelli,  Frederick  the  Great,  Met- 
ternich,  Bismarck,  or  the  Elder  Statesmen  of  Japan. 
Diplomatic  intercourse  still  runs  in  the  same  terms 
of  systematised  prevarication,  and  still  turns  about 
the  same  schedule  of  national  pretensions  that  con- 
tented the  medieval  spirit  of  these  masters  of  dynas- 
tic intrigue.  As  a  matter  of  course  and  of  common 
sense  the  nations  still  conceive  themselves  to  be 
rivals,  whose  national  interests  are  incompatible, 
and  whose  divine  right  it  is  to  gain  something  at  one 
another's  cost,  after  the  fashion  of  rival  bandits  or 
business  concerns.  They  still  seek  dominion  and 
still  conceive  themselves  to  have  extra-territorial  in- 
terests of  a  proprietary  sort.  They  still  hold  and 
still  seek  vested  rights  in  colonial  possessions  and  in 
extra-territorial  priorities  and  concessions  of  divers 
and  dubious  kinds.  There  still  are  conferences, 
stipulations  and  guarantees  between  the  Powers, 
touching  the  "  Open  Door  "  in  China,  or  the  equi- 
table partition  of  Africa,  which  read  like  a  chapter 
on  Honor  among  Thieves. 

All  this  run  of  national  pretensions,  wrangles,  do- 
minion, aggrandisement,  chicane,  and  ill-will,  is  noth- 
ing more  than  the  old  familiar  trading  stock  of  the 
diplomatic  brokers  who  do  business  in  dynastic  force 
and  fraud  —  also  called  Realpolitik.  The  demo- 
cratic nations  have  taken  over  in  bulk  the  whole 
job-lot  of  vested  interests  and  divine  rights  that 
once  made  the  monarch  of  the  old  order  an  unfail- 
ing source  of  outrage  and  desolation.  In  the  hands 
of  those  "  Elder  Statesmen  "  who  once  did  business 


130          THE  VESTED  INTERESTS 

under  the  signature  of  the  dynasty,  the  traffic  in  state- 
craft yielded  nothing  better  than  a  mess  of  superflu- 
ous affliction;  and  there  is  no  reason  to  apprehend 
that  a  continuation  of  the  same  traffic  under  the  man- 
agement of  the  younger  statesmen  who  now  do  busi- 
ness in  the  name  of  the  democratic  commonwealth 
is  likely  to  bring  anything  more  comfortable,  even 
though  the  legal  instruments  in  the  case  may  carry 
the  rubber-stamp  O.  K.  of  the  common  man.  The 
same  items  will  foot  up  to  the  same  sum;  and  in 
either  case  the  net  gain  is  always  something  appre- 
ciably less  than  nothing. 

These  national  interests  are  part  of  the  medieval 
system  of  ends,  ways  and  means,  as  it  stood,  complete 
and  useless,  at  that  juncture  when  the  democratic 
commonwealth  took  over  the  divine  rights  of  the 
crown.  It  should  not  be  extremely  difficult  to  un- 
derstand why  they  have  stood  over,  or  why  they 
still  command  the  dutiful  approval  of  the  common 
man.  It  is  a  case  of  aimless  survival,  on  the  whole, 
due  partly  to  the  inertia  of  habit  and  tradition,  partly 
to  the  solicitous  advocacy  of  these  assumed  national 
interests  by  those  classes  —  the  trading  and  office- 
holding  classes  —  who  stand  to  gain  something  by 
the  pursuit  of  them  at  the  cost  of  the  rest.  By  ten- 
acious tradition  out  of  the  barbarian  past  these  peo- 
ples have  continued  to  be  rival  nations  living  in  a 
state  of  habitual  enmity  and  distrust,  for  no  better 
reason  than  that  they  have  not  taken  thought  and 
changed  their  mind. 

After  some  slackening  of  national  animosities  and 
some  disposition  to  neglect  national  pretensions  dur- 
ing the  earlier  decades  of  the  great  era  of  Liberal- 


THE  DIVINE  RIGHT  OF  NATIONS     131 

ism,  the  democratic  nations  have  been  gradually 
shifting  back  to  a  more  truculent  attitude  and  a 
more  crafty  and  more  rapacious  management  in  all 
international  relations.  This  aggressive  chauvinis- 
tic policy  has  been  called  Imperialism.  The  move- 
ment has  visibly  kept  pace,  more  or  less  closely,  with 
the  increasing  range  and  volume  of  commerce  and 
foreign  investments  during  the  same  period.  And 
to  further  this  business  enterprise  there  has  been  an 
ever  increasing  resort  to  military  power.  It  is  rea- 
sonably believed  that  traders  and  investors  in  for- 
eign parts  are  able  to  derive  a  larger  profit  from 
their  business  when  they  have  the  backing  of  a  pow- 
erful and  aggressive  national  government;  particu- 
larly in  their  dealings  with  helpless  and  backward 
peoples,  and  more  particularly  if  their  own  national 
government  is  sufficiently  unscrupulous  and  over- 
bearing,—  which  may  confidently  be  counted  on  so 
long  as  these  governments  continue  to  be  adminis- 
tered by  the  gentlemanly  delegates  of  the  vested  in- 
terests and  the  kept  classes. 

As  regards  the  intrinsic  value  which  is  popularly 
attached  to  the  imponderable  national  possessions, 
in  the  way  of  honor  and  prestige,  there  is  little  to  be 
said,  beyond  the  stale  reflection  that  there  is  no  dis- 
puting about  tastes.  It  all  is  at  least  a  profitable 
illusion,  for  the  use  of  those  who  are  in  a  position 
to  profit  by  it.  Such  as  the  crown  and  the  office- 
holders. But  the  people  of  the  civilised  nations  be- 
lieve themselves  to  have  also  a  material  interest  of 
some  sort  in  enlarging  the  national  dominions  and 
in  extending  the  foreign  trade  of  their  business  men 
and  safeguarding  the  foreign  claims  of  their  vested 


132          THE  VESTED  INTERESTS 

interests.  And  the  Americans,  like  many  others, 
harbor  the  singular  delusion  that  they  can  derive  a 
collective  benefit  from  obstructing  the  country's 
trade  at  the  national  frontiers  by  means  of  a  tariff 
barrier,  and  so  defeating  their  own  industry  by  that 
much.  It  is  a  survival  out  of  the  barbarian  past,  out 
of  the  time  when  the  dynastic  politicians  were  oc- 
cupied with  isolating  the  nation  and  making  it  self- 
sufficient,  as  an  engine  of  warlike  enterprise  for  the 
pursuit  of  dynastic  ambitions  and  the  greater  dis- 
comfort of  their  neighbors.  In  an  increasing  degree 
as  the  new  order  of  industry  has  come  into  bearing, 
any  such  policy  of  industrial  isolation  and  self-suf- 
ficiency has  become  more  difficult  and  more  injuri- 
ous; for  a  free  range  and  unhindered  specialisation 
is  of  the  essence  of  the  new  industrial  order. 

The  experience  of  the  war  has  shown  conclu- 
sively that  no  one  country  can  hereafter  supply  its 
own  needs  either  in  raw  materials  or  in  finished 
goods.  Both  the  winning  and  the  losing  side  have 
shown  that.  The  new  industrial  order  necessarily 
overlaps  the  national  frontiers,  even  in  the  case  of 
a  nation  possessed  of  so  extensive  and  varied  natural 
resources  as  America.  So  that  in  spite  of  all  the 
singularly  ingenious  obstruction  of  the  American 
tariff  the  Americans  still  continue  to  draw  on  for- 
eign sources  for  most  or  all  of  their  tea,  coffee, 
sugar,  tropical  and  semi-tropical  fruits,  vegetable 
oils,  vegetable  gums  and  pigments,  cordage  fibers, 
silks,  rubber,  and  a  bewildering  multitude  of  minor 
articles  of  daily  use.  Even  so  peculiarly  American 
an  industry  as  chewing-gum  is  wholly  dependent  on 
foreign  raw  material,  and  quite  unavoidably  so. 


133 

The  most  that  can  be  accomplished  by  any  tariff  un- 
der these  circumstances  is  more  or  less  obstruction. 
Isolation  and  self-sufficiency  are  already  far  out  of 
the  question. 

But  there  are  certain  vested  interests  which  find 
their  profit  in  maintaining  a  tariff  barrier  as  a  means 
of  keeping  the  price  up  and  keeping  the  supply  down; 
and  the  common  man  still  faithfully  believes  that 
the  profits  which  these  vested  interests  derive  in  this 
way  from  increasing  the  cost  of  his  livelihood  and 
decreasing  the  net  productivity  of  his  industry  will 
benefit  him  in  some  mysterious  way.  He  is  per- 
suaded that  high  prices  and  a  scant  supply  of  goods 
at  a  high  labor  cost  is  a  desirable  state  of  things. 
This  is  incredible,  but  there  is  no  denying  the  fact. 
He  knows,  of  course,  that  the  profits  of  business 
go  to  the  business  men,  the  vested  interests,  and  to 
no  one  else;  but  he  is  still  beset  with  the  picturesque 
hallucination  that  any  unearned  income  which  goes 
to  those  vested  Interests  whose  central  office  is  in 
New  Jersey  is  paid  to  himself  in  some  underhand 
way,  while  the  gains  of  those  vested  interests  that 
are  domiciled  in  Canada  are  obviously  a  grievous 
net  loss  to  him.  The  tariff  moves  in  a  mysterious 
way,  its  wonders  to  perform. 

To  all  adult  persons  of  sound  mind,  and  not  un- 
duly clouded  with  the  superstitions  of  the  price  sys- 
tem, it  is  an  obvious  matter  of  fact  that  any  pro- 
tective tariff  is  an  obstruction  to  industry  and  a 
means  of  impoverishment,  just  so  far  as  it  is  ef- 
fective. The  arguments  to  the  contrary  invariably 
turn  out  to  be  pettifogger's  special  pleading  for  some 
vested  interest  or  for  a  warlike  national  policy,  and 


134          THE  VESTED  INTERESTS 

these  arguments  convince  only  those  persons  who 
are  able  to  believe  that  a  part  is  greater  than  the 
whole.  It  also  lies  in  the  nature  of  protective 
tariffs  that  they  always  cost  the  nation  dispropor- 
tionately much  more  than  they  are  worth  to  those 
vested  interests  which  profit  by  them.  In  this  re- 
spect they  are  like  any  other  method  of  businesslike 
sabotage.  Their  aim,  and  presumably  their  effect, 
is  to  keep  the  price  up  by  keeping  the  supply  down, 
to  hinder  competitors  and  retard  production.  As 
in  other  instances  of  businesslike  sabotage,  there- 
fore, the  net  margin  of  advantage  to  those  who  profit 
by  it  is  greatly  less  than  what  it  costs  the  community. 
Yet  it  is  to  be  noted  that  the  Americans  have 
prospered,  on  the  whole,  under  protective  tariffs 
which  have  been  as  ingeniously  and  comprehensively 
foolish  as  could  well  be  contrived.  There  is  even 
some  color  of  reason  in  the  contentions  of  the  pro- 
tectionists that  the  more  reasonable  tariffs  have  com- 
monly been  more  depressing  to  industry  than  the 
most  imbecile  of  them.  All  of  which  should  be 
disquieting  to  the  advocates  of  free  trade.  The 
defect  of  the  free-trade  argument,  and  the  disappoint- 
ment of  free-trade  policies,  lies  in  overlooking  the 
fact  that  in  the  absence  of  an  obstructive  tariff  sub- 
stantially the  same  amount  of  obstruction  has  to  be 
accomplished  by  other  means,  if  business  is  to  pros- 
per. And  business  prosperity  is  the  only  manner 
of  prosperity  known  or  provided  for  among  the 
civilised  nations.  It  is  the  only  manner  of  pros- 
perity on  which  the  divine  right  of  the  nation  gives 
it  a  claim.  A  protective  tariff  is  only  an  alterna- 
tive method  of  businesslike  sabotage.  If  and  so 


THE  DIVINE  RIGHT  OF  NATIONS     135 

far  as  this  method  of  keeping  the  supply  of  goods 
within  salutary  bounds  is  not  resorted  to,  other 
means  of  accomplishing  the  same  result  must  be  em- 
ployed. For  so  long  as  investment  continues  to 
control  industry  the  welfare  of  the  community  is 
bound  up  with  the  prosperity  of  its  business;  and 
business  can  not  be  carried  on  without  reasonably 
profitable  prices;  and  reasonably  profitable  prices 
can  not  be  maintained  without  a  salutary  limitation 
of  the  supply;  which  means  slowing  down  production 
to  such  a  rate  and  volume  as  the  traffic  will  bear. 

A  protective  tariff  is  only  one  means  of  crippling 
the  country's  industrial  forces,  for  the  good  of  busi- 
ness. In  its  absence  all  that  matter  will  be  taken 
care  of  by  other  means.  The  tariff  may  perhaps 
be  a  little  the  most  flagrant  method  of  sabotage  by 
which  the  vested  interests  are  enabled  to  do  a  rea- 
sonably profitable  business;  but  there  is  nothing 
more  than  a  difference  of  degree,  and  not  a  large 
difference  at  that.  So  long  as  industry  is  managed 
with  a  view  to  a  profitable  price  it  is  quite  indis- 
pensable to  guard  against  an  excessive  rate  and  vol- 
ume of  output.  In  the  absence  of  all  businesslike 
sabotage  the  productive  capacity  of  the  industrial 
system  would  very  shortly  pass  all  reasonable 
bounds,  prices  would  decline  disastrously  and  over- 
head charges  would  not  be  covered,  fixed  charges  on 
corporation  securities  and  other  credit  instruments 
could  not  be  met,  and  the  whole  structure  of  busi- 
ness enterprise  would  collapse,  as  it  occasionally  has 
done  in  times  of  "  over-production."  There  is  no 
doing  business  without  a  fair  price,  since  the  net 
price  over  cost  is  the  motive  of  business.  A  pro- 


136          THE  VESTED  INTERESTS 

tective  tariff  is,  in  effect,  an  auxiliary  safeguard 
against  overproduction.  Incidentally  the  fact  that 
its  imposition  does  not  result  in  insufferable  hard- 
ship serves  also  to  show  that  the  new  order  of  in- 
dustry is  highly  productive,  quite  inordinately  pro- 
ductive in  fact.  And  it  is  a  divine  right  of  the 
nation  to  use  its  discretion  and  offset  this  inordinate 
efficiency  of  its  common  stock  of  knowledge  by 
adroitly  crippling  its  own  commerce  and  the  com- 
merce of  its  neighbors,  for  the  benefit  of  those 
vested  interests  that  are  domiciled  within  the  na- 
tional frontiers. 

But  the  divine  right  of  national  self-direction  also 
covers  much  else  of  the  same  description,  besides 
the  privilege  of  setting  up  a  tariff  in  restraint  of 
trade.  There  are  many  channels  of  such  discrim- 
ination, of  divers  kinds,  but  always  it  will  be  found 
that  these  channels  are  channels  of  sabotage  and 
that  they  serve  the  advantage  of  some  group  of 
vested  interests  which  do  business  under  the  shelter 
of  the  national  pretensions.  There  are  foreign  in- 
vestments and  concessions  to  be  procured  and  safe- 
guarded for  the  nation's  business  men  by  moral 
suasion  backed  with  warlike  force,  and  the  common 
man  pays  the  cost;  there  is  discrimination  to  be 
exercised  and  perhaps  subsidies  and  credits  to  be 
accorded  those  of  the  nation's  business  men  who  de- 
rive a  profit  from  shipping,  for  the  discomfiture  of 
alien  competitors,  and  the  common  man  pays  the 
cost;  there  are  colonies  to  be  procured  and  admin- 
istered at  the  public  expense  for  the  private  gain  of 
certain  traders,  concessionaires  and  administrative 
office-holders,  and  the  common  man  pays  the  cost. 


THE  DIVINE  RIGHT  OF  NATIONS     137 

Back  of  it  all  is  the  nation's  divine  right  to  carry 
arms,  to  support  a  competitive  military  and  naval 
establishment,  which  has  ceased,  under  the  new  or- 
der, to  have  any  other  material  use  than  to  enforce 
or  defend  the  businesslike  right  of  particular  vested 
interests  to  get  something  for  nothing  in  some  par- 
ticular place  and  in  some  particular  way,  and  the 
common  man  pays  the  cost  and  swells  with  pride. 


VII 

LIVE   AND   LET   LIVE 

THE  Nation's  inalienable  right  of  self-direction  and 
self-help  is  of  the  same  nature  and  derivation  as  the 
like  inalienable  right  of  self-help  vested  in  an  irre- 
sponsible king  by  the  grace  of  God.  In  both  cases 
alike  it  is  a  divine  right,  in  the  sense  that  it  is  irre- 
sponsible and  will  not  bear  scrutiny,  being  an  arbi- 
trary right  of  self-help  at  the  cost  of  any  whom  it 
may  concern.  There  is  the  further  parallel  that  in 
both  cases  alike  the  ordinary  exercise  of  these  rights 
confers  no  material  benefit  on  the  underlying  com- 
munity. In  practical  effect  the  exercise  of  such  di- 
vine rights,  whether  by  a  sovereign  monarch  or  by 
the  officials  of  a  sovereign  nation,  works  damage 
and  discomfort  to  one  and  another,  within  the  na- 
tional frontiers  or  beyond  them,  with  nothing  better 
to  show  for  it  than  some  relatively  slight  gain  in 
prestige  or  in  wealth  for  some  relatively  small  group 
of  privileged  persons  or  vested  interests.  And  the 
gain  of  those  who  profit  by  this  means  is  always  got 
at  the  cost  of  the  common  man  at  home  and  abroad. 
These  inalienable  rights  are  an  abundant  source  of 
grievances  to  be  redressed  at  the  cost  of  the  common 
man. 

It  has  long  been  a  stale  commonplace  that  the 
quarrels  of  competitive  kings  in  pursuit  of  their  di- 
vine rights  have  brought  nothing  but  damage  and 

138 


LIVE  AND  LET  LIVE  139 

discomfort  to  the  underlying  peoples  whose  mate- 
rial wealth  and  man  power  have  been  made  use  of 
for  national  enterprise  of  this  kind.  And  it  is  no 
less  evident,  though  perhaps  less  notorious,  that  the 
pursuit  of  national  advantages  by  competitive  na- 
tions by  use  of  the  same  material  wealth  and  man 
power  unavoidably  brings  nothing  better  than  the 
same  net  output  of  damage  and  discomfort  to  all  the 
peoples  concerned.  There  is  of  course  the  reserva- 
tion that  in  the  one  case  the  kings  and  their  accom- 
plices and  pensioners  have  come  in  for  some  gain 
in  prestige  and  in  perquisites,  while  in  the  case  of 
the  competitive  nations  certain  vested  interests  and 
certain  groups  of  the  kept  classes  stand  to  gain 
something  in  the  way  of  perquisites  and  free  income; 
but  always  and  in  the  nature  of  the  case  the  total 
gain  is  less  than  the  cost;  and  always  the  gain  goes 
to  the  kept  classes  and  the  cost  falls  on  the  common 
man.  So  much  is  notorious,  particularly  so  far  as 
it  is  a  question  of  material  gain  and  loss.  So  far 
as  it  is  an  immaterial  question  of  jealousy  and  pres- 
tige, the  line  of  division  runs  between  nations,  but 
as  regards  material  gain  and  loss  it  is  always  a  di- 
vision between  the  kept  classes  and  the  common  man; 
and  always  the  common  man  has  more  to  lose  than 
the  kept  classes  stand  to  gain. 

The  war  is  now  concluded,  provisionally,  and 
peace  is  in  prospect  for  the  immediate  future,  also 
provisionally.  As  is  true  between  individuals,  so 
also  among  the  nations,  peace  means  the  same  thing 
as  Live  and  Let  Live,  which  also  means  the  same 
thing  as  a  world  made  safe  for  democracy.  And 
the  rule  of  Live  and  Let  Live  means  the  discontinu- 


i4o          THE  VESTED  INTERESTS 

ance  of  animosity  and  discrimination  between  the  na- 
tions. Therefore  it  involves  the  disallowance  of 
such  incompatible  national  pretensions  as  are  likely 
to  afford  ground  for  international  grievances, — 
which  comes  near  involving  the  disallowance  of  all 
those  claims  and  perquisites  that  habitually  go  in 
under  the  captions  of  "  national  self-determination  " 
and  "  national  integrity,"  as  these  phrases  are  em- 
ployed in  diplomatic  intercourse.  At  the  same  time 
it  involves  the  disallowance  of  all  those  class  pre- 
tensions and  vested  interests  that  make  for  dissension 
within  the  nation.  Ill-will  is  not  a  practicable  basis 
of  peace,  whether  within  the  nation  or  between  the 
nations.  So  much  is  plain  matter  of  course.  What 
may  be  the  chances  of  peace  and  war,  at  home  and 
abroad,  in  the  light  of  these  blunt  and  obvious  prin- 
ciples taken  in  conjunction  with  the  diplomatic  ne- 
gotiations now  going  forward  at  home  and  abroad, 
—  all  that  is  sufficiently  perplexing. 

At  home  in  America  for  the  transient  time  being, 
the  war  administration  has  under  pressure  of  neces- 
sity somewhat  loosened  the  strangle-hold  of  the 
vested  interests  on  the  country's  industry;  and  in  so 
doing  it  has  shocked  the  safe  and  sane  business  men 
into  a  state  of  indignant  trepidation  and  has  at  the 
same  time  doubled  the  country's  industrial  output. 
But  all  that  has  avowedly  been  only  for  the  transient 
time  being,  "  for  the  period  of  the  war,"  as  a  dis- 
tasteful concession  to  demands  that  would  not  wait. 
So  that  the  country  now  faces  a  return  to  the  pre- 
carious conditions  of  a  provisional  peace  on  the  lines 
of  the  status  quo  ante.  Already  the  vested  inter- 
ests are  again  tightening  their  hold  and  are  busily 


LIVE  AND  LET  LIVE  141 

arranging  for  a  return  to  business  as  usual;  which 
means  working  at  cross-purposes  as  usual,  waste  of 
work  and  materials  as  usual,  restriction  of  output  as 
usual,  unemployment  as  usual,  labor  quarrels  as 
usual,  competitive  selling  as  usual,  mendacious  ad- 
vertising as  usual,  waste  of  superfluities  as  usual  by 
the  kept  classes,  and  privation  as  usual  for  the  com- 
mon man.  All  of  which  may  conceivably  be  put  up 
with  by  this  people  "  lest  a  worse  evil  befall."  All 
this  runs  blamelessly  in  under  the  rule  of  Live  and 
Let  Live  as  interpreted  in  the  light  of  those  en- 
lightened principles  of  self-help  that  have  come 
down  from  the  eighteenth  century  and  that  go  to 
make  up  the  established  scheme  of  law  and  order, 
although  it  does  not  meet  the  needs  of  the  same  rule 
as  it  would  be  enforced  by  the  exigencies  of  the  new 
order  in  industry. 

Meanwhile,  abroad,  the  gentlemen  of  the  old 
school  who  direct  the  affairs  of  the  nations  are  laying 
down  the  lines  on  which  peace  is  to  be  established 
and  maintained,  with  a  painstaking  regard  for  all 
those  national  pretensions  and  discriminations  that 
have  always  made  for  international  embroilment, 
and  with  an  equally  painstaking  disregard  for  all 
those  exigencies  of  the  new  order  that  call  for  a 
de  facto  observance  of  the  rule  of  Live  and  Let  Live. 
It  is  notorious  beyond  need  of  specification  that  the 
new  order  in  industry,  even  more  insistently  than 
any  industrial  situation  that  has  gone  before,  calls 
for  a  wide  and  free  intercourse  in  trade  and  in- 
dustry, regardless  of  national  frontiers  and  national 
jealousies.  In  this  connection  a  national  frontier, 
as  it  is  commonly  made  use  of  in  current  state- 


142          THE  VESTED  INTERESTS 

craft,  is  a  line  of  demarkation  for  working  at  cross- 
purposes,  for  mutual  obstruction  and  distrust.  It 
is  only  necessary  to  recall  that  the  erection  of  a  new 
national  frontier  across  any  community  which  has 
previously  enjoyed  the  privilege  of  free  intercourse 
unburdened  with  customs  frontiers  will  be  felt  to 
be  a  grievous  burden;  and  that  the  erection  of  such 
a  line  of  demarkation  for  other  diplomatic  work  at 
mutual  cross-purposes  is  likewise  an  unmistakable 
nuisance. 

Yet,  in  the  peace  negotiations  now  going  for- 
ward the  gentlemen  of  the  old  school  to  whom  the 
affairs  of  the  nations  have  been  "entrusted" — by 
shrewd  management  on  their  own  part  —  continue 
to  safeguard  all  this  apparatus  of  mutual  defeat  and 
distrust, —  and  indeed  this  is  the  chief  or  sole  object 
of  their  solicitude,  as  it  also  is  the  chief  or  sole  ob- 
ject of  those  vested  interests  for  whose  benefit  the 
diplomatic  gentlemen  of  the  old  school  continue  to 
manage  the  affairs  of  the  nations. 

The  state  of  the  case  is  plainly  to  be  seen  in  the 
proposals  of  those  nationalities  that  are  now  coming 
forward  with  a  new  claim  to  national  self-determina- 
tion. Invariably  any  examination  of  the  bill  of 
particulars  set  up  by  the  spokesmen  of  these  pro- 
posed new  national  establishments  will  show  that  the 
material  point  of  it  all  is  an  endeavor  to  set  up  a 
national  apparatus  for  working  at  mutual  cross- 
purposes  with  their  neighbors,  to  add  something  to 
the  waste  and  confusion  caused  by  the  national  dis- 
criminations already  in  force,  to  violate  the  rule  of 
Live  and  Let  Live  at  some  new  point  and  by  some 
further  apparatus  of  discomfort. 


LIVE  AND  LET  LIVE  143 

There  are  nationalities  that  get  along  well  enough, 
to  all  appearance,  without  being  "  nations  "  in  that 
militant  and  obstructive  fashion  that  is  aimed  at  in 
these  projected  creations  of  the  diplomatic  nation- 
makers.  Such  are  the  Welsh  and  the  Scotch,  for 
instance.  But  it  is  not  the  object-lesson  of  Welsh 
or  Scottish  experience  that  guides  the  new  projects. 
The  nationalities  which  are  now  escaping  from  a 
rapacious  imperialism  of  the  old  order  are  being 
organized  and  managed  by  the  safe  and  sane  gentle- 
men of  the  old  school,  who  have  got  their  notions 
of  safety  and  sanity  from  the  diplomatic  intrigue 
of  that  outworn  imperialism  out  of  which  these  op- 
pressed nationalities  aim  to  escape.  And  these 
gentlemen  of  the  old  school  are  making  no  move  in 
the  direction  of  tolerance  and  good  will  —  as  how 
should  they  when  all  their  conceptions  of  what  is 
right  and  expedient  are  the  diplomatic  preconcep- 
tions of  the  old  regime.  They,  being  gentlemen  of 
the  old  school,  will  have  none  of  that  amicable  and 
unassuming  nationality  which  contents  the  Welsh  and 
the  Scotch  who  have  tried  out  this  matter  and  have  in 
the  end  come  to  hold  fast  only  so  much  of  their 
national  pretensions  as  will  do  no  material  harm. 
What  is  aimed  at  is  not  a  disallowance  of  bootless 
national  jealousies,  but  only  a  shift  from  an  intoler- 
able imperialism  on  a  large  scale  to  an  ersatz-im- 
perialism drawn  on  a  smaller  scale,  conducted  on 
the  same  general  lines  of  competitive  diplomacy  and 
serving  interests  of  the  same  general  kind  —  vested 
interests  of  business  or  of  privilege. 

The  projected  new  nations  are  not  patterned  on 
the  Welsh  or  the  Scottish  model,  but  for  all  that 


144          THE  VESTED  INTERESTS 

there  is  nothing  novel  in  their  design;  and  how 
should  there  be  when  they  are  the  offspring  of  the 
imagination  of  these  safe  and  sane  gentlemen  of 
the  old  school  fertilised  with  the  ancient  conceptions 
of  imperialistic  diplomacy  and  national  prestige? 
In  effect  it  is  all  drawn  to  the  scale  and  pattern  al- 
ready made  notorious  by  the  Balkan  states.  It 
should  also  be  safe  to  presume  that  the  place  and 
value  of  these  newly  emerging  nations  in  the  comity 
of  peoples  under  the  prospective  regime  of  pro- 
visional peace  will  be  something  not  notably  different 
from  what  the  Balkan  states  have  habitually  placed 
on  view;  which  may  be  deprecated  by  many  well- 
meaning  persons,  but  which  is  scarcely  to  be  undone 
by  well-wishing.  The  chances  of  war  and  politics 
have  thrown  the  fortunes  of  these  projected  new 
nations  into  the  hands  of  these  politic  gentlemen  of 
the  old  school,  and  by  force  of  inveterate  habit  these 
very  practical  persons  are  unable  to  conceive  that 
anything  else  than  a  Balkan  state  is  fit  to  take  the 
place  of  that  imperial  rule  that  has  now  fallen  into 
decay.  So  Balkan-state  national  establishments  ap- 
pear to  be  the  best  there  is  in  prospect  in  the  new 
world  of  safe  democracy. 

So  true  is  this,  that  even  in  those  instances,  such 
as  the  Finns  and  other  fragments  of  the  Russian  im- 
perial dominions,  where  a  newly  emerging  nation  has 
set  out  to  go  on  its  way  without  taking  pains  to 
safeguard  the  grievances  of  the  old  order, —  even  in 
these  instances  that  should  seem  to  concern  no  one 
but  themselves,  the  gentlemen  of  the  old  school  who 
guard  the  political  institutions  of  the  old  order  in 
the  world  at  large  find  it  impossible  to  keep  their 


LIVE  AND  LET  LIVE  145 

hands  off  and  to  let  these  adventurous  pilgrims  of 
hope  go  about  their  own  business  in  their  own  way. 
Self-determination  proves  to  be  insufferable  if  it 
partakes  of  the  new  order  rather  than  of  the  old, 
at  least  so  long  as  the  safe  and  sane  gentlemen  of 
the  old  school  can  hinder  it  by  any  means  at  their 
command.  It  is  felt  that  the  vested  interests  which 
underlie  the  gentlemen  of  the  old  school  would  not 
be  sufficiently  secure  in  the  keeping  of  these  unshorn 
and  unshaven  pilgrims  of  hope,  and  the  doubt  may 
be  well  taken.  So  that,  within  the  intellectual  hori- 
zon of  the  practical  statesmen,  the  only  safe,  sane, 
and  profitable  manner  of  national  establishment  and 
national  policy  for  these  newcomers  is  something 
after  the  familiar  fashion  of  the  Balkan  states;  and 
it  may  also  be  admitted  quite  broadly  that  these 
newly  arriving  peoples  commonly  are  content  to  seek 
their  national  fortunes  along  precisely  these  Balkan- 
state  lines;  although  the  Finns  and  their  like  are  per- 
haps to  be  counted  as  an  unruly  exception  to  the  rule. 
These  Balkan  states,  whose  spirit,  aims,  and  ways 
are  so  admirable  in  the  eyes  of  the  gentlemanly 
keepers  of  the  old  political  and  economic  order,  are 
simply  a  case  of  imperialism  in  the  raw.  They  are 
all  and  several  still  in  the  pickpocket  stage  of  dynas- 
tic statemaking,  comparable  with  the  state  of  Prus- 
sia before  Frederick  the  Great  Pickpocket  came  to 
the  throne.  And  now,  with  much  sage  counsel  from 
the  safe  and  sane  statesmen  of  the  status  quo  ante, 
Czechs,  Slovaks,  Slovenes,  Ruthenians,  Ukrainians, 
Croats,  Poles  and  Polaks  are  breathlessly  elbowing 
their  way  into  line  with  these  minuscular  Michiavel- 
lians.  Quite  unchastened  by  their  age-long  experi- 


146          THE  VESTED  INTERESTS 

ence  in  adversity  they  are  all  alike  clamoring  for 
national  establishments  stocked  up  with  all  the 
time-tried  contrivances  for  discomfort  and  defeat. 
With  one  hand  they  are  making  frantic  gestures  of 
distress  for  an  "  outlet  to  the  sea  "  by  means  of 
which  to  escape  insufferable  obstruction  of  their  over- 
seas trade  by  their  nationally  minded  neighbors, 
while  with  the  other  hand  they  are  feverishly  at 
work  to  contrive  a  customs  frontier  of  their  own,  to- 
gether with  other  standard  devices  for  obstructing 
their  neighbors'  trade  and  their  own,  so  soon  as  they 
shall  have  any  trade  to  obstruct.  Such  is  the  force 
of  habit  and  tradition.  In  other  words,  these  peo- 
ples are  aiming  to  become  self-determining  nations 
in  good  standing. 

And  all  the  while  it  is  plain  to  all  men  that  a 
national  "  outlet  to  the  sea  "  has  no  meaning  in  time 
of  peace  and  in  the  absence  of  national  governments 
working  at  cross-purposes.  Which  comes  near  to 
saying  that  the  sole  material  object  of  these  new 
projects  in  nation-making  is  to  work  at  cross-pur- 
poses with  their  neighbors  across  the  new-found 
national  frontiers.  So  also  it  is  plain  that  this  mu- 
tual working  at  cross-purposes  between  the  nations 
hinders  the  keeping  of  the  peace,  even  when  it  is  all 
mitigated  with  all  the  approved  apparatus  of  dip- 
lomatic make-believe,  compromise,  and  intrigue. 
Just  as  it  is  plain  that  the  peace  is  not  to  be  kept  by 
use  of  armaments,  but  all  the  while  national  arma- 
ments are  also  included  as  an  indispensable  adjunct 
of  national  life,  in  all  the  projects  of  these  new  na- 
tions of  the  Balkan  pattern.  The  right  to  carry 
arms  is  an  inalienable  right  of  national  self-deter- 


LIVE  AND  LET  LIVE  147 

mination  and  an  indispensable  means  of  self-help, 
as  understood  by  these  nation-makers  of  the  old 
school.  So  also  it  is  plain  that  national  pretensions 
in  the  field  of  foreign  trade  and  investment,  and  all 
the  diversified  expedients  for  furthering  and  pro- 
tecting the  profitable  enterprise  of  the  vested  inter- 
ests in  foreign  parts,  run  consistently  at  cross-pur- 
poses with  the  keeping  of  the  peace. 

And  all  the  while  the  rule  of  Live  and  Let  Live, 
as  it  works  out  within  the  framework  of  the  new 
industrial  order,  will  not  tolerate  these  things.  But 
the  rule  of  Live  and  Let  Live,  which  embodies  the 
world's  hope  of  peace  on  earth  and  a  practicable 
modicum  of  good  will  among  men,  is  not  of  the 
essence  of  that  time-worn  statesmanship  which  is 
now  busily  making  the  world  safe  for  the  vested 
interests.  Neglect  and  disallowance  of  those  things 
that  make  for  embroilment  does  not  enter  into  the 
counsels  of  the  nation-makers  or  of  those  stupendous 
figures  of  veiled  statecraft  that  now  move  in  the 
background  and  are  shaping  the  destinies  of  these 
and  other  nations  with  a  view  to  the  status  quo  ante. 

All  these  peoples  that  now  hope  to  be  nations  have 
long  been  nationalities.  A  nation  is  an  organisation 
for  collective  offence  and  defence,  in  peace  and  war, 
—  essentially  based  on  hate  and  fear  of  other  na- 
tions; a  nationality  is  a  cultural  group,  bound  to- 
gether by  home-bred  affinities  of  language,  tradition, 
use  and  wont,  and  commonly  also  by  a  supposed 
community  race, —  essentially  based  on  sympathies 
and  sentiments  of  self-complacency  within  itself. 
The  Welsh  and  the  Scotch  are  nationalities,  more 


148          THE  VESTED  INTERESTS 

or  less  well  defined,  although  they  are  not  nations 
in  the  ordinary  meaning  of  the  word;  so  also  are  the 
Irish,  with  a  difference,  and  such  others  as  the  Finns 
and  the  Armenians.  The  American  republic  is  a 
nation,  but  not  a  nationality  in  any  full  measure. 
The  Welsh  and  the  Scotch  have  learned  the  wisdom 
of  Live  and  Let  Live,  within  the  peace  of  the  Em- 
pire, and  they  are  not  moving  to  break  bounds  and 
set  up  a  national  integrity  after  the  Balkan  pattern. 
The  case  of  the  Irish  is  peculiar;  at  least  so  they 
say.  They,  that  is  to  say  the  Irish  by  sentiment 
rather  than  by  domicile,  the  Irish  people  as  con- 
trasted with  the  vested  interests  of  Ulster,  of  the 
landlords,  of  the  Church,  and  of  the  bureaucracy, — 
these  Irish  have  long  been  a  nationality  and  are  now 
mobilising  all  their  force  to  set  up  a  Balkan  state, 
autonomous  and  defensible,  within  the  formal 
bounds  of  the  Empire  or  without.  Their  case  is 
peculiar  and  instructive.  It  throws  a  light  on  the 
margin  of  tolerance,  of  what  the  traffic  will  bear, 
beyond  which  an  increased  pressure  on  a  subject 
population  will  bring  no  added  profit  to  the  vested 
interests  for  whose  benefit  the  pressure  is  brought 
to  bear.  It  is  a  case  of  the  Common  Man  hard 
ridden  in  due  legal  form  by  the  vested  interests  of 
the  Island,  and  of  the  neighboring  island,  which 
are  duly  backed  by  an  alien  and  biased  bureaucracy 
aided  and  abetted  by  the  priestly  pickpockets  of  the 
poor.  So  caught  in  this  way  between  the  devil  and 
the  deep  sea,  it  is  small  wonder  if  they  have  chosen 
in  the  end  to  follow  counsels  of  desperation  and  are 
moving  to  throw  their  lot  into  the  deep  sea  of  na- 
tional self-help  and  international  intrigue.  They 


LIVE  AND  LET  LIVE  149 

have  reached  the  point  where  they  have  ceased  to 
say:  "It  might  have  been  worse."  The  case  of 
the  Finns,  Jews,  and  Armenians  is  not  greatly  differ- 
ent in  general  effect. 

It  is  easy  to  fall  into  a  state  of  perturbation  about 
the  evil  case  of  the  submerged,  exploited,  and  op- 
pressed minor  nationalities;  and  it  is  not  unusual  to 
jump  to  the  conclusion  that  national  self-determina- 
tion will  surely  mend  their  evil  case.  National  self- 
determination  and  national  integrity  are  words  to 
conjure  with,  and  there  is  no  denying  that  very  sub- 
stantial results  have  been  known  to  follow  from 
such  conjuring.  But  self-determination  is  not  a 
sovereign  remedy,  particularly  not  as  regards  the 
material  conditions  of  life  for  the  common  man,  for 
that  somewhat  more  than  nine-tenths  of  the  popula- 
tion who  always  finally  have  to  bear  the  cost  of  any 
national  establishment.  It  has  been  tried,  and  the 
point  is  left  in  doubt.  So  the  case  of  Belgium  or  of 
Serbia  during  the  past  four  years  has  been  scarcely 
less  evil  than  that  of  the  Armenians  or  the  Poles. 
Belgium  and  Serbia  were  nations,  in  due  form,  very 
much  after  the  pattern  aimed  at  in  the  new  pro- 
jected nations  already  spoken  of,  whereas  the  Ar- 
menians and  the  Poles  have  been  subject  minor  na- 
tionalities. Belgium,  Serbia,  and  Poland  have  been 
subject  to  the  ravages  of  an  imperial  power  which 
claims  rank  as  a  civilised  people,  whereas  the  Ar- 
menians have  been  manhandled  by  the  Turks.  So, 
again,  the  Irish  are  a  subject  minor  nationality, 
whereas  the  Roumanians  are  a  nation  in  due  form. 
In  fact  the  Roumanians  are  just  such  a  Balkan  state 
as  the  Irish  aspire  to  become.  But  no  doubt  the 


150         THE  VESTED  INTERESTS 

common  man  is  appreciably  worse  off  in  his  material 
circumstances  in  Roumania  than  in  Ireland.  Japan, 
too,  is  not  only  a  self-determining  nation  with  a  full 
charge  of  national  integrity,  but  it  is  a  Great  Power; 
yet  the  common  man  —  the  somewhat  more  than 
nine-tenths  of  the  population  —  is  doubtless  worse 
off  in  point  of  hard  usage  and  privation  in  Japan 
than  in  Ireland. 

In  further  illustration  of  this  doubt  and  perplex- 
ity with  regard  to  the  material  value  of  national 
self-determination,  the  case  of  the  three  Scandinavian 
countries  may  be  worth  citing.  They  are  all  and 
several  self-determining  nations,  in  that  Pickwickian 
sense  in  which  any  country  which  is  not  a  Great 
Power  may  be  self-determining  in  the  twentieth  cen- 
tury. But  they  differ  in  size,  population,  wealth, 
power,  and  political  consequence.  In  these  respects 
the  sequence  runs:  Sweden,  Denmark,  Norway,  the 
latter  being  the  smallest,  poorest,  least  self-determin- 
ing, and  in  point  of  self-determining  nationalism  al- 
together the  most  spectacularly  foolish  of  the  lot. 
But  so  far  as  concerns  the  material  conditions  of  life 
for  the  common  man,  they  are  unmistakably  the  most 
favorable,  or  the  most  nearly  tolerable,  in  Norway, 
and  the  least  so  in  Sweden.  The  upshot  of  evidence 
from  these,  and  from  other  instances  that  might  be 
cited,  is  to  leave  the  point  in  doubt.  It  is  not  evi- 
dent that  the  common  man  has  anything  to  gain  by 
national  self-determination,  so  far  as  regards  his 
material  conditions  of  life;  nor  does  it  appear,  on 
the  evidence  of  these  instances,  that  he  has  much  to 
lose  by  that  means. 

These  Scandinavians  differ  from  the  Balkan  states 


LIVE  AND  LET  LIVE  151 

in  that  they  perforce  have  no  imperialistic  ambitions. 
There  may  of  course  be  a  question  on  this  head  so 
far  as  concerns  the  frame  of  mind  of  the  royal  es- 
tablishment in  the  greater  one  of  the  Scandinavian 
kingdoms;  there  is  not  much  that  is  worth  saying 
about  that  matter,  and  the  less  that  is  said,  the  less 
annoyance.  It  is  a  matter  of  no  significance,  any- 
way. The  Scandinavians  are  in  effect  not  imperial- 
istic, perforce.  Which  means  that  in  their  interna- 
tional relations  they  formally  adhere  to  the  rule  of 
Live  and  Let  Live.  Not  so  in  their  domestic  policy, 
however.  They  have  all  endowed  themselves  with 
all  the  encumbrances  of  national  pretensions  and 
discrimination  which  their  circumstances  will  admit. 
Apart  from  a  court  and  church  which  foot  up  to 
nothing  more  comfortable  than  a  gratuitous  bill  of 
expense,  they  are  also  content  to  carry  the  burden  of 
a  national  armament,  a  protective  tariff,  a  national 
consular  service,  and  a  diplomatic  service  which 
takes  care  of  a  moderately  burdensome  series  of 
treaty  agreements  governing  the  trade  relations  of 
the  Scandinavian  business  community;  all  designed 
for  the  benefit  of  the  vested  interests  and  the  kept 
classes  of  the  nation,  and  all  at  the  cost  of  the  com- 
mon man. 

The  case  of  these  relatively  free,  relatively  unas- 
suming, and  relatively  equitable  national  establish- 
ments is  also  instructive.  They  come  as  near  the 
rule  of  Live  and  Let  Live  as  any  national  establish- 
ment well  can  and  still  remain  a  national  establish- 
ment actuated  by  notions  of  competitive  self-help. 
But  all  the  while  the  national  administration  runs 
along,  with  nothing  better  to  show  to  any  impar- 


152          THE  VESTED  INTERESTS 

tial  scrutiny  than  a  considerable  fiscal  burden  and  a 
moderate  volume  of  hindrance  to  the  country's  indus- 
try, together  with  some  incidental  benefit  to  the  vested 
interests  and  the  kept  classes  at  the  cost  of  the  under- 
lying community.  These  Scandinavians  occupy  a  pe- 
culiar position  in  the  industrial  world.  They  are 
each  and  several  too  small  to  make  up  anything  like 
a  self-contained  industrial  community,  even  under 
the  most  unreserved  pressure  of  national  exclusive- 
ness.  Their  industries  necessarily  are  part  and  par- 
cel of  the  industrial  system  at  large,  with  which  they 
are  bound  in  relations  of  give  and  take  at  every 
point.  Yet  they  are  content  to  carry  a  customs  tar- 
iff of  fairly  grotesque  dimensions  and  a  national  con- 
sular service  of  more  grotesque  dimensions  still. 
This  situation  is  heightened  by  their  relatively  sterile 
soil,  their  somewhat  special  and  narrow  range  of  nat- 
ural resources,  and  their  high  latitude,  which  pre- 
cludes any  home  growth  of  many  of  the  indispensa- 
ble materials  of  industry  under  the  new  order.  Yet 
they  are  content  to  carry  their  customs  tariff,  their 
special  commercial  treaties,  and  their  consular  serv- 
ice —  for  the  benefit  of  their  vested  interests. 

It  should  seem  that  this  elaborate  superfluity  of 
national  outlay  and  obstruction  should  work  great 
hardship  to  the  underlying  community  whose  in- 
dustry is  called  on  to  carry  this  burden  of  lag,  leak, 
and  friction.  And  doubtless  the  burden  is  suffi- 
ciently real.  It  amounts,  of  course,  to  the  nation's 
working  at  cross-purposes  with  itself,  for  the  benefit 
of  those  special  interests  that  stand  to  gain  a  little 
something  by  it  all.  But  in  this  as  in  other  works 
of  sabotage  there  are  compensating  effects,  and  these 


LIVE  AND  LET  LIVE  153 

should  not  be  overlooked;  particularly  since  the  case 
is  fairly  typical  of  what  commonly  happens.  The 
waste  and  sabotage  of  the  national  establishment 
and  its  obstructive  policy  works  no  intolerable  hard- 
ship, because  it  all  runs  its  course  and  eats  its  fill 
within  that  margin  of  sabotage  and  wasteful  con- 
sumption that  would  have  to  be  taken  care  of  by 
some  other  agency  in  the  absence  of  this  one.  That 
is  to  say,  something  like  the  same  volume  of  sabot- 
age and  waste  is  indispensable  to  the  prosperity  of 
business  under  the  conditions  of  the  new  order,  so 
long  as  business  and  industry  are  managed  under  the 
conditions  imposed  by  the  price  system.  By  one 
means  or  another  prices  must  be  maintained  at  a 
profitable  level  for  reasons  of  business;  therefore  the 
output  must  be  restricted  to  a  reasonable  rate  and 
volume,  and  wasteful  consumption  must  be  provided 
for,  on  pain  of  a  failing  market.  And  all  this  may 
as  well  be  taken  care  of  by  use  of  a  princely  court, 
an  otiose  church,  a  picturesque  army,  a  well-fed  dip- 
lomatic and  consular  service,  and  a  customs  frontier. 
In  the  absence  of  all  this  national  apparatus  of  sa- 
botage substantially  the  same  results  would  have  to 
be  got  at  by  the  less  seemly  means  of  a  furtive  con- 
spiracy in  restraint  of  trade  among  the  vested  inter- 
ests. There  is  always  something  to  be  said  for  the 
national  integrity. 

The  case  of  these  Scandinavian  nations,  taken  in 
connection  and  comparison  with  what  is  to  be  seen 
elsewhere,  appears  to  say  that  a  national  establish- 
ment which  has  no  pretensions  to  power  and  no  im- 
perialistic ambitions  is  preferable,  in  point  of  econ- 
omy and  peaceable  behavior,  to  an  establishment 


154          THE  VESTED  INTERESTS 

which  carries  these  attributes  of  self-determination 
and  self-help.  The  more  nearly  the  national  in- 
tegrity and  self-determination  approaches  to  make- 
believe  the  less  mischief  is  it  likely  to  work  at  home 
and  the  more  nearly  will  it  be  compatible  with  the 
rule  of  Live  and  Let  Live  in  dealing  with  its  neigh- 
bors. And  the  further  implication  is  plain  without 
argument,  that  the  most  beneficent  change  that  can 
conceivably  overtake  any  national  establishment 
would  be  to  let  it  fall  into  "  innocuous  desuetude." 
Apparently,  the  less  of  it  the  better,  with  no  appar- 
ent limit  short  of  the  vanishing  point. 

Such  appears  to  be  the  object-lesson  enforced  by 
recent  and  current  events,  in  so  far  as  concerns  the 
material  fortunes  of  the  underlying  community  at 
large  as  well  as  the  keeping  of  the  peace.  But  it 
does  not  therefore  follow  that  all  men  and  classes 
will  have  the  same  interest  in  so  neutralising  the 
nation's  powers  and  disallowing  the  national  pre- 
tensions. The  existing  nations  are  not  of  a  homo- 
geneous make-up  within  themselves  —  perhaps  less 
so  in  proportion  as  they  have  progressively  come  un- 
der the  rule  of  the  new  order  in  industry  arid  in  busi- 
ness. There  is  an  increasingly  evident  cleavage  of 
interest  between  industry  and  business,  or  between 
production  and  ownership,  or  between  tangible  per- 
formance and  free  income, —  one  phrase  may  serve 
as  well  as  another,  and  neither  is  quite  satisfactory  to. 
mark  the  contrast  of  interest  between  the  common 
man  on  the  one  hand  and  the  vested  interests  and 
kept  classes  on  the  other  hand.  But  it  should  be' 
sufficiently  plain  that  the  national  establishment  and 
its  control  of  affairs  has  a  value  for  the  vested  in- 


LIVE  AND  LET  LIVE  155 

terests  different  from  what  it  has  for  the  underlying 
community. 

Quite  plainly  the  new  order  in  industry  has  no 
use  or  place  for  national  discrimination  or  national 
pretensions  of  any  kind;  and  quite  plainly  such  a 
phrase  as  "  national  integrity  "  has  no  shadow  of 
meaning  for  this  new  industrial  order  which  over- 
runs national  frontiers  and  overcomes  national  dis- 
crimination as  best  it  can,  in  all  directions  and  all 
the  time.  For  industry  as  carried  on  under  the  new 
order,  the  overcoming  of  national  discrimination  is 
part  of  the  ordinary  day's  work.  But  it  is  otherwise 
with  the  new  order  of  business  enterprise, —  large- 
scale,  corporate,  resting  on  intangible  assets,  and 
turning  on  free  income  which  flows  from  managerial 
sabotage.  The  business  community  has  urgent  need 
of  an  efficient  national  establishment  both  at  home 
and  abroad.  A  settled  government,  duly  equipped 
with  national  pretensions,  and  with  legal  and  mili- 
tary power  to  maintain  the  sacredness  of  contracts 
at  home  and  to  enforce  the  claims  of  its  business  men 
abroad, —  such  an  establishment  is  invaluable  for  the 
conduct  of  business,  though  its  industrial  value  may 
not  unusually  be  less  than  nothing. 

Industry  is  a  matter  of  tangible  performance  in 
the  way  of  producing  goods  and  services.  And  in 
this  connection  it  is  well  to  recall  that  a  vested  in- 
terest is  a  prescriptive  right  to  get  something  for 
nothing.  Now,  any  project  of  reconstruction,  the 
scope  and  method  of  which  are  governed  by  consid- 
erations of  tangible  performance,  is  likely  to  allow 
only  a  subsidiary  consideration  or  something  less  to 
the  legitimate  claims  of  the  vested  interests,  whether 


156          THE  VESTED  INTERESTS 

they  are  vested  interests  of  business  or  of  privilege. 
It  is  more  than  probable  that  in  such  a  case  national 
pretensions  in  the  way  of  preferential  concessions  in 
commerce  and  investment  will  be  allowed  to  fall  into 
neglect,  so  far  as  to  lose  all  value  to  any  vested  in- 
terest whose  fortunes  they  touch.  These  things  have 
no  effect  in  the  way  of  net  tangible  performance. 
They  only  afford  ground  for  preferential  pecuniary 
rights,  always  at  the  cost  of  someone  else;  but  they 
are  of  the  essence  of  things  in  that  pecuniary  order 
within  which  the  vested  interests  of  business  live 
and  move.1  So  also  such  a  matter-of-fact  project  of 
reconstruction  will  be  likely  materially  to  revise  out- 
standing credit  obligations,  including  corporation 
securities,  or  perhaps  even  bluntly  to  disallow  claims 
of  this  character  to  free  income  on  the  part  of  bene- 
ficiaries who  can  show  no  claim  on  grounds  of  cur- 
rent tangible  performance.  All  of  which  is  inimical 
to  the  best  good  of  the  vested  interests  and  the  kept 
classes. 

Reconstruction  which  partakes  of  this  character 
in  any  sensible  degree  will  necessarily  be  viewed  with 
the  liveliest  apprehension  by  the  gentlemanly  states- 
men of  the  old  school,  by  the  kept  classes,  and  by  the 
captains  of  finance.  It  will  be  deplored  as  a  sub- 
version of  the  economic  order,  a  destruction  of  the 
country's  wealth,  a  disorganisation  of  industry,  and 
a  sure  way  to  poverty,  bloodshed,  and  pestilence. 
In  point  of  fact,  of  course,  what  such  a  project  may 
be  counted  on  to  subvert  is  that  dominion  of  owner- 
ship by  which  the  vested  interests  control  and  retard 
the  rate  and  volume  of  production.  The  destruction 
of  wealth  in  such  a  case  will  touch,  directly,  only  the 


LIVE  AND  LET  LIVE  157 

value  of  the  securities,  not  the  material  objects  to 
which  these  securities  have  given  title  of  ownership; 
it  would  be  a  disallowance  of  ownership,  not  a  de- 
struction of  useful  goods.  Nor  need  any  disorgani- 
sation or  disability  of  productive  industry  follow 
from  such  a  move;  indeed,  the  apprehended  cancel- 
ment  of  the  claims  to  income  covered  by  negotiable 
securities  would  by  that  much  cancel  the  fixed  over- 
head charges  resting  on  industrial  enterprise,  and  so 
further  production  by  that  much.  But  for  those 
persons  and  classes  whose  keep  is  drawn  from  pre- 
scriptive rights  of  ownership  or  of  privilege  the  con- 
sequences of  such  a  shifting  of  ground  from  vested 
interest  to  tangible  performance  would  doubtless  be 
deplorable.  In  short,  "Bolshevism  is  a  menace"; 
and  the  wayfaring  man  out  of  Armenia  will  be  likely 
to  ask:  A  menace  to  whom? 


VIII 

THE   VESTED   INTERESTS   AND  THE 
COMMON    MAN 

IN  the  eighteenth  century  certain  principles  of  en- 
lightened common  sense  were  thrown  into  formal 
shape  and  adopted  by  the  civilised  peoples  of  that 
time  to  govern  the  system  of  law  and  order,  use 
and  wont,  under  which  they  chose  to  live.  So  far 
as  concerns  economic  relations  the  principles  which 
so  became  incorporated  into  the  system  of  civilised 
law  and  custom  at  that  time  were  the  principles  of 
equal  opportunity,  self-determination,  and  self-help. 
Chief  among  the  specific  rights  by  which  this  civil- 
ised scheme  of  equal  opportunity  and  self-help  were 
to  be  safeguarded  were  the  rights  of  free  contract 
and  security  of  property.  These  make  up  the  sub- 
stantial core  of  that  system  of  principles  which  is 
called  the  modern  point  of  view,  in  so  far  as  con- 
cerns trade,  industry,  investment,  credit  obligations, 
and  whatever  else  may  properly  be  spoken  of  as 
economic  institutions.  And  these  still  stand  over 
today,  paramount  among  the  inalienable  rights 
of  all  free  citizens  in  all  free  countries;  they  are 
the  groundwork  of  the  economic  system  as  it  runs 
today,  and  this  existing  system  can  undergo  no  ma- 
terial change  of  character  so  long  as  these  paramount 
rights  of  civilised  men  continue  to  be  inalienable. 

158 


THE  COMMON  MAN  159 

Any  move  to  set  these  rights  aside  would  be  subver- 
sive of  the  modern  economic  order;  whereas  no  re- 
vision or  alteration  of  established  rights  and  usages 
will  amount  to  a  revolutionary  move,  so  long  as  it 
does  not  disallow  these  paramount  economic  rights. 

When  the  constituent  principles  of  the  modern 
point  of  view  were  accepted  and  the  modern  scheme 
of  civilised  life  was  therewith  endorsed  by  the  civ- 
ilised peoples,  in  the  eighteenth  century,  these  rights 
of  self-direction  and  self-help  were  counted  on  as 
the  particular  and  sufficient  safeguard  of  equity 
and  industry  in  any  civilised  country.  They  were 
counted  on  to  establish  equality  among  men  in  all 
their  economic  relations  and  to  maintain  the  indus- 
trial system  at  the  highest  practicable  degree  of  pro- 
ductive efficiency.  They  were  counted  on  to  give 
enduring  effect  to  the  rule  of  Live  and  Let  Live. 
And  such  is  still  the  value  ascribed  to  these  rights 
in  the  esteem  of  modern  men.  The  maintenance 
of  law  and  order  still  means  primarily  and  chiefly 
the  maintenance  of  these  rights  of  ownership  and  pe- 
cuniary obligation. 

But  things  have  changed  since  that  time  in  such 
a  way  that  the  rule  of  Live  and  Let  Live  is  no 
longer  completely  safeguarded  by  maintaining  these 
rights  in  the  shape  given  them  in  the  eighteenth  cen- 
tury,—  or  at  least  there  are  large  sections  of  the 
people  in  these  civilised  countries  who  are  beginning 
to  think  so,  which  is  just  as  good  for  practical  pur- 
poses. Things  have  changed  in  such  a  way  since 
that  time,  that  the  ownership  of  property  in  large 
holdings  now  controls  the  nation's  industry,  and 
therefore  it  controls  the  conditions  of  life  for  those 


160          THE  VESTED  INTERESTS 

who  are  or  wish  to  be  engaged  in  industry;  at  the 
same  time  that  the  same  ownership  of  large  wealth 
controls  the  markets  and  thereby  controls  the  con- 
ditions of  life  for  those  who  have  to  resort  to  the 
markets  to  sell  or  to  buy.  In  other  words,  it  has 
come  to  pass  with  the  change  of  circumstances  that 
the  rule  of  Live  and  Let  Live  now  waits  on  the  dis- 
cretion of  the  owners  of  large  wealth.  In  fact,  those 
thoughtful  men  in  the  eighteenth  century  who  made 
so  much  of  these  constituent  principles  of  the  mod- 
ern point  of  view  did  not  contemplate  anything  like 
the  system  of  large  wealth,  large-scale  industry,  and 
large-scale  commerce  and  credit  which  prevails  to- 
day. They  did  not  foresee  the  new  order  in  in- 
dustry and  business,  and  the  system  of  rights  and 
obligations  which  they  installed,  therefore,  made 
no  provision  for  the  new  order  of  things  that  has 
come  on  since  their  time. 

The  new  order  has  brought  the  machine  industry, 
corporation  finance,  big  business,  and  the  world  mar- 
ket. Under  this  new  order  in  business  and  indus- 
try, business  controls  industry.  Invested  wealth  in 
large  holdings  controls  the  country's  industrial  sys- 
tem, directly  by  ownership  of  the  plant,  as  in  the 
mechanical  industries,  or  indirectly  through  the  mar- 
ket, as  in  farming.  So  that  the  population  of  these 
civilised  countries  now  falls  into  two  main  classes: 
those  who  own  wealth  invested  in  large  holdings 
and  who  thereby  control  the  conditions  of  life  for 
the  rest;  and  those  who  do  not  own  wealth  in  suffi- 
ciently large  holdings,  and  whose  conditions  of  life 
are  therefore  controlled  by  these  others.  It  is  a  di- 
vision, not  between  those  who  have  something  and 


THE  COMMON  MAN  161 

those  who  have  nothing  —  as  many  socialists  would 
be  inclined  to  describe  it  —  but  between  those  who 
own  wealth  enough  to  make  it  count,  and  those  who 
do  not. 

And  all  the  while  the  scale  on  which  the  control 
of  industry  and  the  market  is  exercised  goes  on  in- 
creasing; from  which  it  follows  that  what  was  large 
enough  for  assured  independence  yesterday  is  no 
longer  large  enough  for  tomorrow.  Seen  from  an- 
other direction,  it  is  at  the  same  time  a  division  be- 
tween those  who  live  on  free  income  and  those  who 
live  by  work, —  a  division  between  the  kept  classes 
and  the  underlying  community  from  which  their 
keep  is  drawn.  It  is  sometimes  spoken  of  in  this 
bearing  —  particularly  by  certain  socialists  —  as  a 
division  between  those  who  do  no  useful  work  and 
those  who  do;  but  this  would  be  a  hasty  generalisa- 
tion, since  not  a  few  of  those  persons  who  have  no 
assured  free  income  also  do  no  work  that  is  of  ma- 
terial use,  as  e.  g.,  menial  servants.  But  the  gravest 
significance  of  this  cleavage  that  so  runs  through  the 
population  of  the  advanced  industrial  countries  lies 
in  the  fact  that  it  is  a  division  between  the  vested  in- 
terests and  the  common  man.  It  is  a  division  be- 
tween those  who  control  the  conditions  of  work  and 
the  rate  and  volume  of  output  and  to  whom  the  net 
output  of  industry  goes  as  free  income,  on  the  one 
hand,  and  those  others  who  have  the  work  to  do  and 
to  whom  a  livelihood  is  allowed  by  these  persons  in 
control,  on  the  other  hand.  In  point  of  numbers  it 
is  a  very  uneven  division,  of  course. 

A  vested  interest  is  a  legitimate  right  to  get  some- 
thing for  nothing,  usually  a  prescriptive  right  to  an 


1 62          THE  VESTED  INTERESTS 

income  which  is  secured  by  controlling  the  traffic  at 
one  point  or  another.  The  owners  of  such  a  pre- 
scriptive right  are  also  spoken  of  as  a  vested  in- 
terest Such  persons  make  up  what  are  called  the 
kept  classes.  But  the  kept  classes  also  comprise 
many  persons  who  are  entitled  to  a  free  income  on 
other  grounds  than  their  ownership  and  control  of 
industry  or  the  market,  as,  e.  g.,  landlords  and  other 
persons  classed  as  "  gentry,"  the  clergy,  the  Crown 
—  where  there  is  a  Crown  —  and  its  agents,  civil 
and  military.  Contrasted  with  these  classes  who 
make  up  the  vested  interests,  and  who  derive  an  in- 
come from  the  established  order  of  ownership  and 
privilege,  is  the  common  man.  He  is  common  in 
the  respect  that  he  is  not  vested  with  such  a  pre- 
scriptive right  to  get  something  for  nothing.  And 
he  is  called  common  because  such  is  the  common  lot 
of  men  under  the  new  order  of  business  and  indus- 
try; and  such  will  continue  (increasingly)  to  be  the 
common  lot  so  long  as  the  enlightened  principles  of 
secure  ownership  and  self-help  handed  down  from 
the  eighteenth  century  continue  to  rule  human  affairs 
by  help  of  the  new  order  of  industry. 

The  kept  classes,  whose  free  income  is  secured  to 
them  by  the  legitimate  rights  of  the  vested  interests, 
are  less  numerous  than  the  common  man  —  less  nu- 
merous by  some  ninety-five  per  cent  or  thereabouts  — 
and  less  serviceable  to  the  community  at  large  in 
perhaps  the  same  proportion,  so  far  as  regards  any 
conceivable  use  for  any  material  purpose.  In  this 
sense  they  are  uncommon.  But  it  is  not  usual  to 
speak  of  the  kept  classes  as  the  uncommon  classes, 
inasmuch  they  personally  differ  from  the  common  run 


THE  COMMON  MAN  163 

of  mankind  in  no  sensible  respect.  It  is  more  usual 
to. speak  of  them  as  "the  better  classes,"  because 
they  are  in  better  circumstances  and  are  better  able 
to  do  as  they  like.  Their  place  in  the  economic 
scheme  of  the  civilised  world  is  to  consume  the  net 
product  of  the  country's  industry  over  cost,  and  so 
prevent  a  glut  of  the  market. 

But  this  broad  distinction  between  the  kept  classes 
and  their  vested  interests  on  the  one  side  and  the 
common  man  on  the  other  side  is  by  no  means  hard 
and  fast.  There  are  many  doubtful  cases,  and  a 
shifting  across  the  line  occurs  now  and  again,  but 
the  broad  distinction  is  not  doubtful  for  all  that. 
The  great  distinguishing  mark  of  the  common  man 
is  that  he  is  helpless  within  the  rules  of  the  game  as 
it  is  played  in  the  twentieth  century  under  the  en- 
lightened principles  of  the  eighteenth  century. 

There  are  all  degrees  of  this  helplessness  that 
characterises  the  common  lot.  So  much  so  that  cer- 
tain classes,  professions,  and  occupations  —  such  as 
the  clergy,  the  military,  the  courts,  police,  and  legal 
profession  —  are  perhaps  to  be  classed  as  belonging 
primarily  with  the  vested  interests,  although  they 
can  scarcely  be  counted  as  vested  interests  in  their 
own  right,  but  rather  as  outlying  and  subsidiary 
vested  interests  whose  tenure  is  conditioned  on  their 
serving  the  purposes  of  those  principal  and  self-direct- 
ing vested  interests  whose  tenure  rests  immediately 
on  large  holdings  of  invested  wealth.  The  income 
which  goes  to  these  subsidiary  or  dependent  vested 
interests  is  of  the  nature  of  free  income,  in  so  far 
that  it  is  drawn  from  the  yearly  product  of  the  un- 


1 64         THE  VESTED  INTERESTS 

derlying  community;  but  in  another  sense  it  is 
scarcely  to  be  counted  as  "  free  "  income,  in  that  its 
continuance  depends  on  the  good  will  of  those  con- 
trolling vested  interests  whose  power  rests  on  the 
ownership  of  large  invested  wealth.  Still  it  will  be 
found  that  on  any  test  vote  these  subsidiary  or  aux- 
iliary vested  interests  uniformly  range  themselves 
with  their  superiors  in  the  same  class,  rather  than 
with  the  common  man.  By  sentiment  and  habitual 
outlook  they  belong  with  the  kept  classes,  in  that 
they  are  staunch  defenders  of  that  established  order 
of  law  and  custom  which  secures  the  great  vested  in- 
terests in  power  and  insures  the  free  income  of  the 
kept  classes.  In  any  twofold  division  of  the  popu- 
lation these  are  therefore,  on  the  whole,  to  be  ranged 
on  the  side  of  the  old  order,  the  vested  interests,  and 
the  kept  classes,  both  in  sentiment  and  as  regards  the 
circumstances  which  condition  their  life  and  comfort. 
Beyond  these,  whose  life-interests  are,  after  all, 
closely  bound  up  with  the  kept  classes,  there  are 
other  vested  interests  of  a  more  doubtful  and  per- 
plexing kind;  classes  and  occupations  which  would 
seem  to  belong  with  the  common  lot,  but  which  range 
themselves  at  least  provisionally  with  the  vested  in- 
terests and  can  scarcely  be  denied  standing  as  such. 
Such,  as  an  illustrative  instance,  is  the  A.  F.  of  L. 
Not  that  the  constituency  of  the  A.  F.  of  L.  can 
be  said  to  live  on  free  income,  and  is  therefore  to  be 
counted  in  with  the  kept  classes  —  the  only  reserva- 
tion on  that  head  would  conceivably  be  the  corps  of 
officials  in  the  A.  F.  of  L.,  who  dominate  the  policies 
of  that  organisation  and  exercise  a  prescriptive  right 
to  dispose  of  its  forces,  at  the  same  time  that  they 


THE  COMMON  MAN  165 

habitually  come  in  for  an  income  drawn  from  the 
underlying  organisation.  The  rank  and  file  assur- 
edly are  not  of  the  kept  classes,  nor  do  they  visibly 
come  in  for  a  free  income.  Yet  they  stand  on  the 
defensive  in  maintaining  a  vested  interest  in  the  per- 
rogatives  and  perquisites  of  their  organisation. 
They  are  apparently  moved  by  a  feeling  that  so  long 
as  the  established  arrangements  are  maintained  they 
will  come  in  for  a  little  something  over  and  above 
what  would  come  to  them  if  they  were  to  make  com- 
mon cause  with  the  undistinguished  common  lot.  In 
other  words,  they  have  a  vested  interest  in  a  narrow 
margin  of  preference  over  and  above  what  goes  to 
the  common  man.  But  this  narrow  margin  of  net 
gain  over  the  common  lot,  this  vested  right  to  get 
a  narrow  margin  of  something  for  nothing,  has  hith- 
erto been  sufficient  to  shape  their  sentiments  and  out- 
look in  such  a  way  as,  in  effect,  to  keep  them  loyal  to 
the  large  business  interests  with  whom  they  nego- 
tiate for  this  narrow  margin  of  preference.  As  is 
true  of  the  vested  interests  in  business,  so  in  the  case 
of  the  A.  F.  of  L.,  the  ordinary  ways  and  means  of 
enforcing  their  claim  to  a  little  something  over  and 
above  is  the  use  of  a  reasonable  sabotage,  in  the 
way  of  restriction,  retardation,  and  unemployment. 
Yet  the  constituency  of  the  A.  F.  of  L.,  taken  man 
for  man,  is  not  readily  to  be  distinguished  from  the 
common  sort  so  far  as  regards  their  conditions  of 
life.  The  spirit  of  vested  interest  which  animates 
them  may,  in  fact,  be  nothing  more  to  the  point  than 
an  aimless  survival. 

Farther  along  the  same  line,  larger  and  even  more 
perplexing,  is  the  case  of  the  American  farmers,  who 


1 66          THE  VESTED  INTERESTS 

also  are  in  the  habit  of  ranging  themselves,  on  the 
whole,  with  the  vested  interests  rather  than  with  the 
common  man.  By  sentiment  and  outlook  the  farm- 
ers are,  commonly,  steady  votaries  of  that  established 
order  which  enables  the  vested  interests  to  do  a  "  big 
business "  at  their  expense.  Such  is  the  tradition 
which  still  binds  the  farmers,  however  unequivocally 
their  material  circumstances  under  the  new  order  of 
business  and  industry  might  seem  to  drive  the  other 
way.  In  the  ordinary  case  the  American  farmer  is 
now  as  helpless  to  control  his  own  conditions  of  life 
as  the  commonest  of  the  common  run.  He  is  caught 
between  the  vested  interests  who  buy  cheap  and  the 
vested  interests  who  sell  dear,  and  it  is  for  him  to 
take  or  leave  what  is  offered, —  but  ordinarily  to 
take  it,  on  pain  of  "  getting  left." 

There  is  still  afloat  among  the  rural  population 
a  slow-dying  tradition  of  the  "  Independent  Far- 
mer," who  is  reputed  once  upon  a  time  to  have  lived 
his  own  life  and  done  his  own  work  as  good  him 
seemed,  and  who  was  content  to  let  the  world  wag. 
But  all  that  has  gone  by  now  as  completely  as  the 
other  things  that  are  told  in  tales  which  begin  with 
"  Once  upon  a  time."  It  has  gone  by  into  the  same 
waste  of  regrets  with  the  like  independence  which 
the  country-town  retailer  is  believed  to  have  enjoyed 
once  upon  a  time.  But  the  country-town  retailer, 
too,  still  stands  stiffly  on  the  vested  rights  of  the 
trade  and  of  the  town;  he  is  by  sentiment  and  habit- 
ual outlook  a  business  man  who  guides,  or  would 
like  to  guide,  his  enterprise  by  the  principle  of  charg- 
ing what  the  traffic  will  bear,  of  buying  cheap  and 
selling  dear.  He  still  manages  to  sell  dear,  but  he 


THE  COMMON  MAN  167 

does  not  commonly  buy  cheap,  except  what  he  buys 
of  the  farmer,  for  the  massive  vested  interests  in 
the  background  now  decide  for  him,  in  the  main, 
how  much  his  traffic  will  bear.  He  is  not  placed  so 
very  differently  from  the  farmer  in  this  respect,  ex- 
cept that,  being  a  middleman,  he  can  in  some  appre- 
ciable degree  shift  the  burden  to  a  third  party.  The 
third  party  in  the  case  is  the  farmer;  the  massive 
vested  interests  who  move  in  the  background  of  the 
market  do  not  lend  themselves  to  that  purpose. 

Except  for  the  increasing  number  of  tenant  farm- 
ers, the  American  farmers  of  the  large  agricultural 
sections  still  are  owners  who  cultivate  their  own 
ground.  They  are  owners  of  property,  who  might 
be  said  to  have  an  investment  in  their  own  farms, 
and  therefore  they  fancy  that  they  have  a  vested  in- 
terest in  the  farm  and  its  earning-capacity.  They 
have  carried  over  out  of  the  past  and  its  old  order  of 
things  a  delusion  to  the  effect  that  they  have  some- 
thing to  lose.  It  is  quite  a  natural  and  rather  an 
engaging  delusion,  since,  barring  incumbrances,  they 
are  seized  of  a  good  and  valid  title  at  law,  to  a  very 
tangible  and  useful  form  of  property.  And  by  due 
provision  of  law  and  custom  they  are  quite  free  to 
use  or  abuse  their  holdings  in  the  land,  to  buy  and 
sell  it  and  its  produce  altogether  at  their  own  pleas- 
ure. It  is  small  wonder  if  the  farmers,  with  the 
genial  traditions  of  the  day  before  yesterday  still 
running  full  and  free  in  their  sophisticated  brains, 
are  given  to  consider  themselves  typical  holders  of  a 
legitimate  vested  interest  of  a  very  substantial  kind. 
In  all  of  which  they  count  without  their  host;  their 
host,  under  the  new  order  of  business,  being  those 


i68 

massive  vested  interests  that  move  obscurely  in  the 
background  of  the  market,  and  whose  rule  of  life  it 
is  to  buy  cheap  and  sell  dear. 

In  the  ordinary  case  the  farmers  of  the  great 
American  farming  regions  are  owners  of  the  land 
and  improvements,  except  for  an  increasing  propor- 
tion of  tenant  farmers.  But  it  is  the  farmer-owner 
that  is  commonly  had  in  mind  in  speaking  of  the 
American  farmers  as  a  class.  Barring  incum- 
brances,  these  farmer-owners  have  a  good  and  valid 
title  to  their  land  and  improvements;  but  their  title 
remains  good  only  so  long  as  the  run  of  the  market 
for  what  they  need  and  for  what  they  have  to  sell  does 
not  take  such  a  turn  that  the  title  will  pass  by  process 
of  liquidation  into  other  hands,  as  may  always  hap- 
pen. And  the  run  of  the  market  which  conditions 
the  farmer's  work  and  livelihood  has  now  come  to 
depend  on  the  highly  impersonal  manoeuvres  of 
those  massive  interests  that  move  in  the  background 
and  find  a  profit  in  buying  cheap  and  selling  dear. 
In  point  of  law  and  custom  there  is,  of  course,  noth- 
ing to  hinder  the  American  farmer  from  considering 
himself  to  be  possessed  of  a  vested  interest  in  his 
farm  and  its  working,  if  that  pleases  his  fancy.  The 
circumstances  which  decide  what  he  may  do  with 
his  farm  and  its  equipment,  however,  are  prescribed 
for  him  quite  deliberately  and  quite  narrowly  by 
those  other  vested  interests  in  the  background,  which 
are  massive  enough  to  regulate  the  course  of  things 
in  business  and  industry  at  large.  He  is  caught  in 
the  system,  and  he  does  not  govern  the  set  and  mo- 
tions of  the  system.  So  that  the  question  of  his 
effectual  standing  as  a  vested  interest  becomes  a 


THE  COMMON  MAN  169 

question  of  fact,  not  of  preference  and  genial 
tradition. 

A  vested  interest  is  a  legitimate  right  to  get  some- 
thing for  nothing.  The  American  farmer  —  say, 
the  ordinary  farmer  of  the  grain-growing  Middle 
West  —  can  be  said  to  be  possessed  of  such  a  vested 
interest  if  he  habitually  and  securely  gets  some- 
thing in  the  way  of  free  income  above  cost,  counting 
as  cost  the  ordinary  rate  of  wages  for  work  done  on 
the  farm  plus  ordinary  returns  on  the  replacement 
value  of  the  means  of  production  which  he  employs. 
Now  it  is  notorious  that,  except  for  quite  exceptional 
cases,  there  are  no  intangible  assets  in  farming;  and 
intangible  assets  are  the  chief  and  ordinary  indica- 
tion of  free  income,  that  is  to  say,  of  getting  some- 
thing for  nothing.  Any  concern  that  can  claim  no 
intangible  assets,  in  the  way  of  valuable  good-will, 
monopoly  rights,  or  outstanding  corporation  securi- 
ties, has  no  substantial  claim  to  be  rated  as  a  vested 
interest.  What  constitutes  a  valid  claim  to  stand- 
ing as  a  vested  interest  is  the  assured  customary  abil- 
ity to  get  something  more  in  the  way  of  income  than 
a  full  equivalent  for  tangible  performance  in  the 
way  of  productive  work. 

The  returns  which  these  farmers  are  in  the  habit 
of  getting  from  their  own  work  and  from  the  work 
of  their  household  and  hired  help  do  not  ordinarily 
include  anything  that  can  be  called  free  or  unearned 
income, —  unless  one  should  go  so  far  as  to  declare 
that  income  reckoned  at  ordinary  rates  on  the  tangi- 
ble assets  engaged  in  this  industry  is  to  be  classed 
as  unearned  income,  which  is  not  the  usual  meaning 
of  the  expression.  It  may  be  that  popular  opinion 


170          THE  VESTED  INTERESTS 

on  these  matters  will  take  such  a  turn  some  time 
that  men  will  come  to  consider  that  income  which  is 
derived  from  the  use  of  land  and  equipment  is 
rightly  to  be  counted  as  unearned  income,  because  it 
does  not  correspond  to  any  tangible  performance  in 
the  way  of  productive  work  on  the  part  of  the  per- 
son to  whom  it  goes.  But  for  the  present  that  is  not 
the  popular  sense  of  the  matter,  and  that  is  not  the 
meaning  of  the  words  in  popular  usage.  For  the 
present,  at  least,  reasonable  returns  on  the  replace- 
ment value  of  tangible  assets  are  not  considered  to 
be  unearned  income. 

It  is  true,  the  habits  of  thought  engendered  by  the 
machine  system  in  industry  and  by  the  mechanically 
standardised  organisation  of  daily  life  under  this 
new  order,  as  well  as  by  the  material  sciences,  are 
of  such  a  character  as  would  incline  the  common 
man  to  rate  all  men  and  things  in  terms  of  tangible 
performance  rather  than  in  terms  of  legal  title  and 
ancient  usage.  And  it  may  well  come  to  pass,  in 
time,  that  men  will  consider  any  income  unearned 
which  exceeds  a  fair  return  for  tangible  performance 
in  the  way  of  productive  work  on  the  part  of  the 
person  to  whom  the  income  goes.  The  mechanistic 
logic  of  the  new  order  of  industry  drives  in  that 
direction,  and  it  may  well  be  that  the  frame  of  mind 
engendered  by  this  training  in  matter-of-fact  ways 
of  thinking  will  presently  so  shape  popular  sentiment 
that  all  income  from  property,  simply  on  the  basis 
of  ownership,  will  be  disallowed,  whether  the  prop- 
erty is  tangible  or  intangible.  All  that  is  a  specula- 
tive question  running  into  the  future.  It  is  to  be 
recognised  and  taken  account  of  that  the  immutable 


THE  COMMON  MAN  171 

principles  of  law  and  equity,  in  matters  of  owner- 
ship and  income  as  well  as  in  other  connections,  are 
products  of  habit,  and  that  habits  are  always  liable 
to  change  in  response  to  altered  circumstances,  and 
the  drift  of  circumstances  is  now  apparently  setting 
in  that  direction.  But  popular  sentiment  has  not 
yet  reached  that  degree  of  emancipation  from  those 
good  old  principles  of  self-help  and  secure  ownership 
that  go  to  make  up  the  modern  (eighteenth-century) 
point  of  view  in  law  and  custojn.  The  equity  of 
income  derived  from  the  use  of  tangible  property 
may  presently  become  a  moot  question;  but  it  is  not 
so  today,  outside  of  certain  classes  in  the  population 
whom  the  law  and  the  courts  are  endeavoring  to 
discourage.  It  is  the  business  of  the  law  and  the 
courts  to  discourage  any  change  of  insight  or  opinion. 
It  appears,  therefore,  that  his  conditions  of  life 
should  throw  the  American  farmer  in  with  the  com- 
mon man  who  has  substantially  nothing  to  lose,  be- 
yond what  the  vested  interests  of  business  can  al- 
ways take  over  at  their  own  discretion  and  in  their 
own  good  time.  In  point  of  material  fact  he  has 
ceased  to  be  a  self-directing  agent;  and  self-help 
has  for  him  come  substantially  to  be  a  make-believe; 
although,  of  course,  in  point  of  legal  formality  he 
still  continues  to  enjoy  all  the  ancient  rights  and 
immunities  of  secure  ownership  and  self-help.  Yet 
it  is  no  less  patent  a  fact  of  current  history  that 
the  American  farmer  continues,  on  the  whole,  to 
stand  fast  by  those  principles  of  self-help  and  free 
bargaining  which  enable  the  vested  interests  to  play 
fast  and  loose  with  him  and  all  his  works.  Such 
is  the  force  of  habit  and  tradition. 


172         THE  VESTED  INTERESTS 

The  reason,  or  at  least  the  preconception,  by  force 
of  which  the  American  farmers  have  been  led,  in 
effect,  to  side  with  the  vested  interests  rather  than 
with  the  common  man,  comes  of  the  fact  that  the 
farmers  are  not  only  farmers  but  also  owners  of 
speculative  real  estate.  And  it  is  as  speculators  in 
land-values  that  they  find  themselves  on  the  side  of 
unearned  income.  As  land-owners  they  aim  and 
confidently  hope  to  get  something  for  nothing  in  the 
unearned  increase  of  land-values.  But  all  the  while 
they  overlook  the  fact  that  the  future  increase  of 
land-values,  on  which  they  pin  their  hopes,  is  already 
discounted  in  the  present  price  of  the  land, —  except 
for  exceptional  and  fortuitous  cases.  As  is  known 
to  all  persons  who  are  at  all  informed  on  this  topic, 
farmland  holdings  in  the  typical  American  farming 
regions  are  overcapitalised,  in  the  sense  that  the  cur- 
rent market  value  of  these  farm-lands  is  considerably 
greater  than  the  capitalised  value  of  the"  income  to 
be  derived  from  their  current  use  as  farmlands. 
This  excess  value  of  the  farmlands  is  a  speculative 
value  due  to  discounting  the  future  increased  value 
which  these  lands  are  expected  to  gain  with  the  fur- 
ther growth  of  population  and  with  increasing  facil- 
ities for  marketing  the  farm  products  of  the  locality. 
It  is  therefore  as  a  land  speculator  holding  his  land 
for  a  rise,  not  as  a  husbandman  cultivating  the  soil 
for  a  livelihood,  that  the  prairie  farmer,  e.  g.,  comes 
in  for  an  excess  value  and  an  overcapitalisation  of 
his  holdings.  All  of  which  has  much  in  common 
with  the  intangible  assets  of  the  vested  interests,  and 
all  of  which  persuades  the  prairie  farmer  that  he 


THE  COMMON  MAN  173 

is  of  a  class  apart  from  the  common  man  who  has 
nothing  to  lose. 

But  he  can  come  in  for  this  unearned  gain  only 
by  the  eventual  sale  of  his  holdings,  not  in  their  cur- 
rent use  as  a  means  of  production  in  farming.  As 
a  business  man  doing  a  speculative  business  in  farm- 
lands the  American  farmer,  in  a  small  way,  runs  true 
to  form  and  so  is  entitled  to  a  modest  place  among 
that  class  of  substantial  citizens  who  get  something 
for  nothing  by  cornering  the  supply  and  "  sitting 
tight."  And  all  the  while  the  massive  interests  that 
move  obscurely  in  the  background  of  the  market  are 
increasingly  in  a  position,  in  their  own  good  time,  to 
disallow  the  farmer  just  so  much  of  this  still-born 
gain  as  they  may  dispassionately  consider  to  be  con- 
venient for  their  own  ends.  And  so  the  farmer-spec- 
ulator of  the  prairie  continues  to  stand  fast  by  the 
principles  of  equity  which  entitle  these  vested  inter- 
ests to  play  fast  and  loose  with  him  and  all  his  works. 

The  facts  of  the  case  stand  somewhat  different 
as  regards  the  American  farmer's  gains  from  his 
work  as  a  husbandman,  or  from  the  use  which  he 
makes  of  his  land  and  stock  in  farming.  His  re- 
turns from  his  work  are  notably  scant.  So  much 
s.o  that  it  is  still  an  open  question  whether,  taken 
one  with  another,  the  American  farmer's  assets  in 
land  and  other  equipment  enable  him,  one  year  with 
another,  to  earn  more  than  what  would  count  as 
ordinary  wages  for  the  labor  which  these  assets 
enable  him  to  put  into  his  product.  But  it  is  be- 
yond question  that  the  common  run  of  those  Amer- 
ican farmers  who  "  work  their  own  land  "  get  at 


174         THE  VESTED  INTERESTS 

the  best  a  very  modest  return  for  the  use  of  their 
land  and  stock, —  so  scant,  indeed,  that  if  usage 
admitted  such  an  expression,  it  would  be  fair  to 
say  that  the  farmer,  considered  as  a  going  concern, 
should  be  credited  with  an  appreciable  item  of  "  neg- 
ative intangible  assets,"  such  as  habitually  to  reduce 
the  net  average  return  on  his  total  active  assets  ap- 
preciably below  the  ordinary  rate  of  discount.  His 
case,  in  other  words,  is  the  reverse  of  the  typical  bus- 
iness concern  of  the  larger  sort,  which  comes  in  for 
a  net  excess  over  ordinary  rates  of  discount  on  its 
tangible  assets,  and  which  is  thereby  enabled  to 
write  into  its  accounts  a  certain  amount  of  intangi- 
ble assets,  and  so  come  into  line  as  a  vested  interest. 
The  farmer,  too,  is  caught  in  the  net  of  the  new  or- 
der; but  his  occupation  does  not  belong  to  that  new 
order  of  business  enterprise  in  which  earning-capac- 
ity  habitually  outruns  the  capitalised  value  of  the 
underlying  physical  property. 

Evidently  the  cleavage  due  to  be  brought  on  by 
the  new  order  in  business  and  industry,  between  the 
vested  interests  and  the  common  man,  has  not  yet 
fallen  into  clear  lines,  at  least  not  in  America.  The 
common  man  does  not  know  himself  as  such,  at  least 
not  yet,  and  the  sections  of  the  population  which  go 
to  make  up  the  common  lot  as  contrasted  with  the 
vested  interests  have  not  yet  learned  to  make  com- 
mon cause.  The  American  tradition  stands  in  the 
way.  This  tradition  says  that  the  people  of  the 
republic  are  made  up  of  ungraded  masterless  men 
who  enjoy  all  the  rights  and  immunities  of  self-di- 
rection, self-help,  free  bargaining,  and  equal  oppor- 


THE  COMMON  MAN  175 

tunity,  quite  after  the  fashion  that  was  sketched  into 
the  great  constituent  documents  of  the  eighteenth 
century. 

Much  doubt  and  some  discontent  is  afoot.  It  is 
becoming  increasingly  evident  that  the  facts  of  ev- 
eryday life  under  the  new  order  do  not  fall  in  with 
the  inherited  principles  of  law  and  custom;  but  the 
farmers,  farm  laborers,  factory  hands,  mine  work- 
men, lumber  hands,  and  retail  tradesmen  have  not 
come  to  anything  like  a  realisation  of  that  new  order 
of  economic  life  which  throws  them  in  together  on 
one  side  of  a  line  of  division,  on  the  other  side  of 
which  stand  the  vested  interests  and  the  kept  classes. 
They  have  not  yet  come  to  realise  that  all  of  them 
together  have  nothing  to  lose  except  such  things  as 
the  vested  interests  can  quite  legally  and  legitimately 
deprive  them  of,  with  full  sanction  of  law  and  cus- 
tom as  it  runs,  so  soon  and  so  far  as  it  shall  suit 
the  convenience  of  the  vested  interests  to  make  such 
a  move.  These  people  of  the  variegated  mass  have 
no  safeguard,  in  fact,  against  the  control  of  their 
conditions  of  life  exercised  by  those  massive  inter- 
ests that  move  obscurely  in  the  background  of  the 
market,  except  such  considerations  of  expediency  as 
may  govern  the  manoeuvres  of  those  massive  ones 
who  so  move  obscurely  in  the  background.  That 
.is  to  say,  the  conditions  of  life  for  the  variegated 
mass  are  determined  by  what  the  traffic  will  bear, 
according  to  the  calculations  of  self-help  which  guide 
the  vested  interests,  all  the  while  that  the  farmers, 
workmen,  consumers,  the  common  lot,  are  still  ani- 
mated with  the  fancy  that  they  have  themselves 
something  to  say  in  these  premises. 


176          THE  VESTED  INTERESTS 

It  is  otherwise  with  the  vested  interests,  on  the 
whole.     They  take  a  more  perspicuous  view  of  their 
own  case  and  of  the  predicament  of  the  common 
man,  the  party  of  the  second  part.     Whereas  the 
variegated  mass  that  makes  up  the  common  lot  have 
not  hitherto  deliberately  taken  sides  together  or  de- 
fined their  own  attitude  toward  the  established  sys- 
tem of  law  and  order  and  its  continuance,  and  so  are 
neither  in  the  right  nor  in  the  wrong  as  regards  this 
matter,  the  vested  interests  and  the  kept  classes,  on 
the  other  hand,  have  reached  insight  and  definition 
of  what  they  need,  want,  and  are  entitled  to.     They 
have  deliberated  and  chosen  their  part  in  the  divi- 
sion, partly  by  interest  and  partly  by  ingrained  ha- 
bitual bent,  no  doubt, —  and  they  are  always  in  the 
right.     They  owe  their  position  and  the  blessings 
that  come  of  it  —  free  income  and  social  preroga- 
tive —  to  the  continued  enforcement  of  these  eight- 
eenth-century principles  of  law  and  order  under  con- 
ditions created  by  the  twentieth-century  state  of  the 
industrial  arts.     Therefore,  it  is  incumbent  on  them, 
in  point  of  expediency,  to  stand  strongly  for  the  es- 
tablished   order    of    inalienable    eighteenth-century 
rights;  and  they  are  at  the  same  time  in  the  right, 
in  point  of  law  and  morals,  in  so  doing,  since  what 
is  right  in  law  and  morals  is  always  a  question  of  set- 
tled habit,  and  settled  habit  is  always  a  legacy  out 
of  the  past.     To  take  their  own  part,  therefore,  the 
vested  interests  and  the  kept  classes  have  nothing 
more  perplexing  to   do  than  simply  to  follow  the 
leadings  of  their  settled  code  in  all  questions  of  law 
and  order  and  thereby  to  fall  neatly  in  with  the  lead- 
ing of  their  own  pecuniary  advantage,  and  always 


THE  COMMON  MAN  177 

and  on  both  counts  to  keep  their  poise  as  safe  and 
sound  citizens  intelligently  abiding  by  the  good  old 
principles  of  right  and  honest  living  which  safeguard 
their  vested  rights. 

The  common  man  is  not  so  fortunate.  He  can- 
not effectually  take  his  own  part  in  this  difficult  con- 
juncture of  circumstances  without  getting  on  the 
wrong  side  of  the  established  run  of  law  and  morals. 
Unless  he  is  content  to  go  on  as  the  party  of  the 
second  part  in  a  traffic  that  is  controlled  by  the  mas- 
sive interests  on  the  footing  of  what  they  consider 
that  the  traffic  will  bear,  he  will  find  himself  in  the 
wrong  and  may  even  come  in  for  the  comfortless 
attention  of  the  courts.  Whereas  if  he  makes  his 
peace  with  the  established  run  of  law  and  custom, 
and  so  continues  to  be  rated  as  a  good  man  and  true, 
he  will  find  that  his  livelihood  falls  into  a  dubious 
and  increasingly  precarious  case.  It  is  not  for  noth- 
ing that  he  is  a  common  man. 

So  caught  in  a  quandary,  it  is  small  wonder  if  the 
common  man  is  somewhat  irresponsible  and  un- 
steady in  his  aims  and  conduct,  so  far  as  touches 
industrial  affairs.  A  pious  regard  for  the  received 
code  of  right  and  honest  living  holds  him  to  a  sub- 
missive quietism,  a  make-believe  of  self-help  and  fair 
dealings;  whereas  the  material  and  pecuniary  cir- 
cumstances that  condition  his  livelihood  under  this 
new  order  drive  him  to  fall  back  on  the  underlying 
rule  of  Live  and  Let  Live,  and  to  revise  the  estab- 
lished code  of  law  and  custom  to  such  purpose  that 
this  underlying  rule  of  life  shall  be  brought  into  bear- 
ing in  point  of  fact  as  well  as  in  point  of  legal  for- 
mality. And  the  training  to  which  the  hard  matter- 


178          THE  VESTED  INTERESTS 

of-fact  logic  of  the  machine  industry  and  the  mechan- 
ical organisation  of  life  now  subjects  him,  constantly 
bends  him  to  a  matter-of-fact  outlook,  to  a  rating  of 
men  and  things  in  terms  of  tangible  performance, 
and  to  an  ever  slighter  respect  for  the  traditional 
principles  that  have  come  down  from  the  eighteenth 
century.  The  common  man  is  constantly  and  in- 
creasingly exposed  to  the  risk  of  becoming  an  unde- 
sirable citizen  in  the  eyes  of  the  votaries  of  law  and 
order.  In  other  words,  vested  rights  to  free  income 
are  no  longer  felt  to  be  secure  in  case  the  common 
man  should  take  over  the  direction  of  affairs. 

Such  a  vested  right  to  free  income,  that  is  to  say 
this  legitimate  right  of  the  kept  classes  to  their  keep 
at  the  cost  of  the  underlying  community,  does  not 
fall  in  with  the  lines  of  that  mechanistic  outlook  and 
mechanistic  logic  which  is  forever  gaining  ground 
as  the  new  order  of  industry  goes  forward.  Such 
free  income,  which  measures  neither  the  investor's 
personal  contribution  to  the  production  of  goods  nor 
his  necessary  consumption  while  engaged  in  industry, 
does  not  fit  in  with  that  mechanistic  reckoning  that 
runs  in  terms  of  tangible  performance,  and  that 
grows  ever  increasingly  habitual  and  convincing  with 
every  further  habituation  to  the  new  order  of  things 
in  the  industrial  world.  Vested  perquisites  have  no 
place  in  the  new  scheme  of  things;  hence  the  new 
scheme  is  a  menace.  It  is  true,  the  well  stabilised 
principles  of  the  eighteenth  century  still  continue  to 
rate  the  investor  as  a  producer  of  goods;  but  it  is 
equally  true  that  such  a  rating  is  palpable  nonsense 
according  to  the  mechanistic  calculus  of  the  new  or- 
der, brought  into  bearing  by  the  mechanical  industry 


THE  COMMON  MAN  179 

and  material  science.  This  may  all  be  an  untoward 
and  distasteful  turn  of  circumstances,  but  there  is  no 
gain  of  tranquillity  to  be  got  from  ignoring  it. 

So  it  comes  about  that,  increasingly,  throughout 
broad  classes  in  these  industrial  countries  there  is 
coming  to  be  visible  a  lack  of  respect  and  affection 
for  the  vested  interests,  whether  of  business  or  of 
privilege;  and  it  rises  to  the  pitch  of  distrust  and 
plain  disallowance  among  those  peoples  on  whom  the 
preconceptions  of  the  eighteenth  century  sit  more 
lightly  and  loosely.  It  still  is  all  vague  and  shifty. 
So  much  so  that  the  guardians  of  law  and  order  are 
still  persuaded  that  they  "  have  the  situation  in 
hand."  But  the  popular  feeling  of  incongruity  and 
uselessness  in  the  current  run  of  law  and  custom  un- 
der the  rule  of  these  timeworn  preconceptions  is  vis- 
ibly gaining  ground  and  gathering  consistency,  even 
in  so  well  ordered  a  republic  as  America.  A  cleav- 
age of  sentiment  is  beginning  to  run  between  the 
vested  interests  and  the  variegated  mass  of  the  com- 
mon lot;  and  increasingly  the  common  man  is  grow- 
ing apathetic,  or  even  impervious,  to  appeals 
grounded  on  these  timeworn  preconceptions  of 
equity  and  good  usage. 

The  fact  of  such  a  cleavage,  as  well  as  the  exist- 
ence of  any  ground  for  it,  is  painstakingly  denied  by 
the  spokesmen  of  the  vested  interests;  and  in  sup- 
port of  that  comfortable  delusion  they  will  cite  the 
exemplary  fashion  in  which  certain  monopolistic 
labor  organisations  "  stand  pat."  It  is  true,  such  a 
quasi-vested  interest  of  the  A.  F.  of  L.,  which  unbid- 
den assumes  to  speak  for  the  common  man,  can. 
doubtless  be  counted  on  to  "  stand  pat "  on  that  sys- 


i8o          THE  VESTED  INTERESTS 

tern  of  imponderables  in  which  its  vested  perquisites 
reside.  So  also  the  kept  classes,  and  their  stewards 
among  the  keepers  of  law  and  custom,  are  inflexibly 
content  to  let  well  enough  alone.  They  can  be 
counted  on  to  see  nothing  more  to  the  point  than  a 
stupidly  subversive  rapacity  in  that  loosening  of  the 
bonds  of  convention  that  so  makes  light  of  the  sacred 
rights  of  vested  interest.  Interested  motives  may 
count  for  something  on  both  sides,  but  it  is  also  true 
that  the  kept  classes  and  the  businesslike  managers  of 
the  vested  interests,  whose  place  in  the  economy  of 
nature  it  is  to  make  money  by  conforming  to  the 
received  law  and  custom,  have  not  in  the  same  de- 
gree undergone  the  shattering  discipline  of  the  New 
Order.  They  are,  therefore,  still  to  be  found  stand- 
ing blamelessly  on  the  stable  principles  of  the  Mod- 
ern Point  of  View. 

But  a  large  fraction  of  the  people  in  the  indus- 
trial countries  is  visibly  growing  uneasy  under  these 
principles  as  they  work  out  under  existing  circum- 
stances. So,  e.  g.,  it  is  evident  that  the  common 
man  within  the  United  Kingdom,  in  so  far  as  the 
Labor  Party  is  his  accredited  spokesman,  is  increas- 
ingly restive  under  the  state  of  "  things  as  they  are," 
and  it  is  scarcely  less  evident  that  he  finds  his  abid- 
ing grievance  in  the  Vested  Interests  and  that  system 
of  law  and  custom  which  cherishes  them.  And 
these  men,  as  well  as  their  like  in  other  countries, 
are  still  in  an  unsettled  state  of  advance  to  positions 
more  definitely  at  variance  with  the  received  law  and 
custom.  In  some  instances,  and  indeed  in  more  or 
less  massive  formation,  this  movement  of  dissent 


THE  COMMON  MAN  181 

has  already  reached  the  limit  of  tolerance  and  has 
found  itself  sharply  checked  by  the  constituted  keep- 
ers of  law  and  custom. 

It  is  perhaps  not  unwarranted  to  count  the  I.  W. 
W.  as  such  a  vanguard  of  dissent,  in  spite  of  the 
slight  consistency  and  the  exuberance  of  its  move- 
ments. After  all,  these  and  their  like,  here  and  in 
other  countries  are  an  element  of  appreciable  weight 
in  the  population.  They  are  also  increasingly  nu- 
merous, in  spite  of  well-conceived  repressive  meas- 
ures, and  they  appear  to  grow  increasingly  sure.  And 
it  will  not  do  to  lose  sight  of  the  presumption  that, 
while  they  may  be  gravely  in  the  wrong,  they  are 
likely  not  to  be  far  out  of  touch  with  the  undistin- 
guished mass  of  the  common  sort  who  still  continue 
to  live  within  the  law.  It  should  seem  likely  that 
the  peculiar  moral  and  intellectual  bent  which  marks 
them  as  "  undesirable  citizens  "  will,  all  the  while, 
be  found  to  run  closer  to  that  of  the  common  man 
than  the  corresponding  bent  of  the  law-abiding  bene- 
ficiaries under  the  existing  system. 

Vaguely,  perhaps,  and  with  a  picturesque  irre- 
sponsibility, these  and  their  like  are  talking  and 
thinking  at  cross-purposes  with  the  principles  of  free 
bargain  and  self-help.  There  is  reason  to  believe 
that  to  their  own  thinking,  when  cast  in  the  terms 
in  which  they  conceive  these  things,  their  notions  of 
reasonable  human  intercourse  are  not  equally  fan- 
tastic and  inconclusive.  So,  there  is  the  dread  word, 
Syndicalism,  which  is  quite  properly  unintelligible 
to  the  kept  classes  and  the  adepts  of  corporation  fi- 
nance, and  which  has  no  definable  meaning  within 


1 82          THE  VESTED  INTERESTS 

the  constituent  principles  of  the  eighteenth  century. 
But  the  notion  of  it  seems  to  come  easy,  by  mere 
lapse  of  habit,  to  these  others  in  whom  the  discipline 
of  the  New  Order  has  begun  to  displace  the  precon- 
ceptions of  the  eighteenth  century. 

Then  there  are,  in  this  country,  the  agrarian  syn- 
dicalists, in  the  shape  of  the  Nonpartisan  League, — 
large,  loose,  animated,  and  untidy,  but  sure  of  itself 
in  its  settled  disallowance  of  the  Vested  Interests, 
and  fast  passing  the  limit  of  tolerance  in  its  inatten- 
tion to  the  timeworn  principles  of  equity.  How  se- 
rious is  the  moral  dereliction  and  the  subversive 
stupidity  of  these  agrarian  syndicalists,  in  the  eyes 
of  those  who  still  hold  fast  to  the  eighteenth  century, 
may  be  gathered  from  the  animation  of  the  business 
community,  the  commercial  clubs,  the  Rotarians,  and 
the  traveling  salesmen,  in  any  place  where  the 
League  raises  its  untidy  head.  And  as  if  advisedly 
to  complete  the  case,  these  agrarians,  as  well  as  their 
running-mates  in  the  industrial  centers  and  along  the 
open  road,  are  found  to  be  slack  in  respect  of  their 
national  spirit.  So,  at  least,  it  is  said  by  those  who 
are  interested  to,  know. 

It  is  not  that  these  and  their  like  are  ready  with 
"  a  satisfactory  constructive  program,"  such  as  the 
people  of  the  uplift  require  to  be  shown  before  they 
will  believe  that  things  are  due  to  change.  It  is 
something  of  the  simpler  and  cruder  sort,  such  as  his- 
tory is  full  of,  to  the  effect  that  whenever  and  so  far 
as  the  timeworn  rules  no  longer  fit  the  new  material 
circumstances  they  presently  fail  to  carry  conviction 
as  they  once  did.  Such  wear  and  tear  of  institu- 


THE  COMMON  MAN  183 

tions  is  unavoidable  where  circumstances  change; 
and  it  is  through  the  altered  personal  equation  of 
those  elements  of  the  population  which  are  most  di- 
rectly exposed  to  the  changing  circumstances  that 
the  wear  and  tear  of  institutions  may  be  expected  to 
take  effect.  To  these  untidy  creatures  of  the  New 
Order  common  honesty  appears  to  mean  vaguely 
something  else,  perhaps  something  more  exacting, 
than  what  was  "  nominated  in  the  bond "  at  the 
time  when  the  free  bargain  and  self-help  were  writ- 
ten into  the  moral  constitution  of  Christendom  by 
the  handicraft  industry  and  the  petty  trade.  And 
why  should  it  not  ? 


THE   END 


000675  196 


HENRY  GOLDMAN 
"NC  BOOKS 
t-a  W    «TM  ST 


